2018 (9) TMI 1495 - AT - Central Excise

CENVAT Credit - input services - Works Contract Services - whether the appellant is entitled for the Cenvat credit in respect of Works Contract Service which was rendered for Repair, Renovation and Modernization of the factory? Held that - Both the lower authorities have never disputed the nature of the services i.e. Repair, Renovation and Modernisation of existing building. The invoices enclosed in the appeal memo also clearly shows that the services are of Repair or Modification - Though the Works Contract services was excluded from the definition of Input service with effect from 01.04.2011 but the services of Repair, Renovation or modernization of the existing factory still exists in the inclusion clause of definition of Input Service given in Rule 2(l) of Cenvat Credit Rules, 2004. The intention of the legislation is very clear that only new construction under Works Contract service is excluded but the Repair, Renovation and Modernisation of existing factory still covered under the definition of Input Service - the services of Repair, Renovation of the factory is admissible Input service and credit is allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Whether the appellant is entitled to Cenvat credit for Works Contract Service rendered for Repair, Renovation, and Modernization of the factory.

Analysis:
The appellant contended that Repair, Renovation, or Modernization services are still eligible for Cenvat credit even though Works Contract services were excluded from the definition of Input Services from 01.04.2011. The appellant relied on a Board Circular and various judgments to support their argument. They also claimed that the demand was time-barred due to complete disclosure of credit details to jurisdictional officers. On the other hand, the Revenue argued that the credit was rightly denied as the Works Contract service was excluded. The lower authorities did not dispute the nature of services provided, which were for Repair or Modernization. The definition of Input Service before and after 01.04.2011 was examined, highlighting that Repair and Renovation were not excluded from the definition. The legislative intention was clarified through a Board Circular, emphasizing that credit for Repair and Renovation services is allowed. The Tribunal found the appellant entitled to Cenvat credit for Works Contract services related to Repair, Renovation, and Modernization, setting aside the impugned order and allowing the appeal.

This judgment clarifies the eligibility of Cenvat credit for Repair, Renovation, and Modernization services under the definition of Input Services despite the exclusion of Works Contract services. It emphasizes the legislative intent and provides a comprehensive analysis of relevant legal provisions, circulars, and precedents to support the decision.