2018 (9) TMI 831 - AT - Service Tax

CENVAT Credit - input services - works contract service after 01.04.2011 - Held that - It is not in dispute that appellant had availed CENVAT credit on works contract services during the relevant period and that they were not eligible to avail the credit on works contract if they were used for the two purposes specified in the exclusion part of the definition of input services under Rule 2(l) of the CENAVT Credit Rules, 2004. Appellant also concedes that they had wrongly taken credit but argues that all the invoices on which they have taken credit do not fall under the exclusion category. This is the factual matter to be verified by the original authority and find it a fit case to be remanded back to him for the purpose. Appeal allowed by way of remand.

Summary

Issues:
Eligibility of credit on input service on works contract service after 01.04.2011.

Analysis:
The appellant, a manufacturer of sugar, filed four appeals against impugned orders seeking to deny credit on works contract services. The main issue was the eligibility of credit on input service on works contract service post 01.04.2011. The definition of 'input service' under Rule 2(l) of CENVAT Credit Rules, 2004 excludes works contract services used for specific purposes. The appellant had availed credit on works contract services, leading to Show Cause Notices for denial of credit, recovery with interest, and imposition of penalties invoking the extended period of limitation.

The appellant argued that while they had indeed availed CENVAT credit on works contract services, not all services fell under the exclusion category. They contended that the original and appellate authorities did not examine invoice-wise details. The appellant also challenged the show cause notice on the grounds of limitation, citing regular filing of ER-1 returns. The Departmental Representative contended that the appellant had wrongly availed credit in violation of the rules, intending to evade duty payment. Both sides presented their arguments, with the Departmental Representative asserting the sustainability of the demand and penalty.

After considering the arguments, it was acknowledged that the appellant had availed CENVAT credit on works contract services during the relevant period, not all of which were eligible. The matter of whether the works contract services fell under the exclusion category needed verification. Consequently, the appeals were remanded back to the original authority to examine each invoice in dispute, determine if they fell under the excluded category, and adjust the demand and penalty accordingly. The appeals were disposed of by way of remand.