2018 (8) TMI 1571 - AT - Central Excise

Service rendered for construction of their office building - CENVAT Credit or not? - Department was of the view that such credit is not eligible as these services fall under works contract service and is not eligible for credit as per the definition of input service with effect from 1.4.2011 - Held that - Though the ld. counsel has vehemently argued that the existing building was repaired and modernized, therefore credit is eligible there is no record to show it was a newly constructed building. The document with respect to permission or approval from by the concerned local bodies or other authorities as approving the construction of new building etc. has to be verified. The department though alleges that the appellants have constructed a new building has not been able to throw light into this aspect. Appeal allowed by way of remand.

Summary

Issues:
1. Eligibility of CENVAT credit on input services for construction of office building.
2. Interpretation of the definition of input service post 1.4.2011.
3. Verification of whether the building was newly constructed or renovated.
4. Determination of completion date of construction services for credit eligibility.

Analysis:
1. The appellant availed CENVAT credit on input services for construction of their office building during May 2011 to May 2012. The Department contended that such credit was not eligible post 1.4.2011 as the services fell under works contract service. A show cause notice was issued, leading to confirmation of credit recovery, interest, and penalty by the original authority and Commissioner (Appeals).

2. The appellant argued that the services were for renovation and modernization, not setting up a new office building. They claimed completion of services before 1.4.2011, citing a Board circular and a relevant legal precedent. The Department maintained that the office building was new post 1.4.2011, making the credit ineligible. The case was remanded for verification if the building was newly constructed or renovated and to determine the completion date of construction services.

3. The appellate authority noted the lack of evidence on whether the building was newly constructed or renovated. It was decided that the issue required further verification by the adjudicating authority to ascertain the nature of the construction. The completion date of services was also disputed, necessitating a reevaluation by the adjudicating authority to determine credit eligibility based on the timeline of construction.

4. The judgment emphasized the need for verification regarding the nature of the construction and the completion date of services to establish the eligibility of the appellant for CENVAT credit on input services. The appeal was allowed by way of remand, providing the appellant with a personal hearing opportunity. Additionally, a miscellaneous application for a change of cause title was allowed.