2019 (3) TMI 1422 - AT - Central Excise

CENVAT credit - input services - fabrication and erection work - Industrial Construction Service or not - Held that - The description of the work as per the purchase order clearly states that it is work order for mechanical work at Sinter Plant. Further, the service provider had admittedly paid service tax under the category of erection, commissioning and installation of equipment or machinery and the appellant has taken the credit under the concerned category - The nature of the service involved in the present case clearly falls within the definition of input service and has not been excluded from the amendment to the definition of input service. Time limitation - Held that - The SCN which was issued on 22/04/2014 was also barred by limitation because the period involved is from September 2011 to August 2012 and audit report was submitted on 17/05/2012 and the show-cause notice was issued on the basis of the observation in the audit report. Further when the entire details regarding the transaction was recorded in the books of accounts, there cannot be any allegation of suppression of facts and further the same was verified by audit party - invoking of longer period of limitation is not tenable under law. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of CENVAT credit for fabrication and erection work service
- Application of the larger period of limitation for demand of CENVAT credit
- Classification of service as industrial construction service

Eligibility of CENVAT Credit:
The appellant, engaged in manufacturing steel blooms, availed CENVAT credit for erection, commissioning, and installation of a Sinter Plant. The Department raised objections based on an audit report, alleging the service fell under "Industrial Construction Service" and was ineligible for credit. The appellant argued the service was mechanical work, not construction. They provided details of the work, invoices, and cited legal precedents supporting their position. The Tribunal found the service provider paid service tax under erection and commissioning, not construction. The description of work in the purchase order supported this. The Tribunal held the service was eligible for credit under input service definition.

Application of Larger Period of Limitation:
The Department invoked the larger period of limitation for demanding CENVAT credit from September 2011 to August 2012. The appellant argued the notice was time-barred, as the audit report was from May 2012, and all details were known to the Department. They asserted no suppression of facts existed. Citing legal precedents, the appellant contended that when transactions are recorded and verified, there is no suppression. The Tribunal agreed, stating the notice was issued late without grounds for alleging suppression, thus not warranting the extended period.

Classification of Service:
The Department contended the service included civil construction, falling under industrial construction service. The appellant argued the service was not construction but related to machinery and equipment. The Tribunal examined the nature of work, purchase order, and invoices. It found the service provider paid tax under erection and commissioning, not construction. Legal precedents supported that authorities over recipients cannot misclassify services. The Tribunal ruled in favor of the appellant, holding the service did not qualify as industrial construction service, allowing the appeal.

In conclusion, the Tribunal set aside the impugned order, finding it unsustainable in law and limitation. The appellant's appeal was allowed, emphasizing the service's eligibility for CENVAT credit and rejecting the application of the extended period of limitation.