2019 (4) TMI 13 - AT - Central Excise

CENVAT Credit - input service - Erection, Commissioning and Installation Service in relation to making of structural duct support for capital goods such as duct support, platform, staircase, shed and other structural support etc. in their factory premises - Held that - Both, the original adjudicating authority as well as the first appellate authority have relied on the exclusion clause for denying the credit on the services used by the appellant. It is not disputed that the services received by the appellant is classified as Erection, Commissioning and Installation service - the exclusion clause A in Rule 2(1) of the Cenvat Credit Rules, does not cover the service in the nature of Erection, Commissioning and Installation Service . Credit cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of service tax credit on 'Erection, Commissioning and Installation Service' for making structural support in a cement plant factory premises.

Analysis:
The appellant, engaged in cement manufacturing, availed Cenvat Credit on inputs, input services, and capital goods as per Cenvat Credit Rules, 2004. The department alleged inadmissible credit on services used for structural support, issuing a show cause notice for recovery. The notice lacked allegations of suppression or fraud, thus not warranting an extended period under Section 11A(4) of the Excise Act.

The appellant contested the notice, highlighting the nature of services received as 'Erection, Commissioning and Installation Services' under Section 65(105)(39a) of the Finance Act. They argued that the exclusion clause in Rule 2(1) of the Cenvat Credit Rules did not cover such services, maintaining proper accounts and disclosure of transactions. The appellant appealed against the Order-in-Original confirming the demand, but the Commissioner (Appeals) upheld the decision.

The exclusion clause 'A' of the definition of 'Input Service' in Rule 2(1) was crucial in the case. Both the original authority and the appellate authority relied on this clause to deny credit on the services used by the appellant. However, the services received were classified as 'Erection, Commissioning and Installation service,' not explicitly covered by the exclusion clause. Therefore, the impugned order was set aside, and the appeal was allowed.

The judgment was pronounced on 25.04.2019 by Mr. Anil Choudhary, Member (Judicial) at the Appellate Tribunal CESTAT NEW DELHI. The appellant's contention regarding the nature of services and the exclusion clause played a pivotal role in the decision, ultimately leading to the allowance of the appeal.