2020 (4) TMI 673 - AT - Central Excise

CENVAT Credit - input services - constructions services used in excavation of ponds etc. during the period 2011-2012 to 2013 to 2014 - HELD THAT - It is evident from the invoices that the same is towards the receipt of the services in the nature of labour for handling of stores. It is also evident that the service provider is registered with the Department and have charged service tax on the invoices, which have been undisputedly paid by the appellant - it has been consistent view of the courts and also of the CBEC in its various circulars that, for any error on the part of the service provider, in the nature of mistake under the correct head, no adverse inference can be taken on the service receiver - credit allowed. Renovation/repair services - HELD THAT - Credit pertains to renovation/repair services provided by M/s.Nagada Infratech Pvt. Ltd., Nagada and M/s.Fabrication, Nagda and some part belongs to repair and maintenance and some part towards the construction of new storage tank/pond. As storage tank is an eligible capital asset under Rule 2 (a)(A), the appellant is eligible for cenvat credit - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of cenvat credit totaling ?26,90,753/- for wrongly taken credit on construction services and renovation/repair services.

Issue 1: Disallowance of cenvat credit for wrongly taken credit on construction services.
The appellant, engaged in manufacturing chemicals, availed cenvat credit on input services, including construction services. The Revenue contended that construction services are excluded from the definition of "input services," and thus, the appellant wrongly took cenvat credit. A show cause notice was issued proposing to demand central excise duty for invoices of services provided by a construction company. The appellant argued that the services were for handling of materials in the store, fulfilling prerequisites for cenvat credit. The Joint Commissioner confirmed the demand, citing a misinterpretation. The Tribunal, after considering the invoices and relevant circulars, held that the amount for labor services was allowable to the appellant, as the service provider's error did not warrant adverse inference on the appellant.

Issue 2: Disallowance of cenvat credit for wrongly taken credit on renovation/repair services.
The second disallowed amount pertained to credit taken against renovation/repair services. The Adjudicating Authority disallowed this credit, alleging it was wrongly taken. The appellant argued that the services included repair and maintenance of civil structures, which are eligible for cenvat credit. They also referenced a Board's Circular allowing credit for repair or renovation services done on factory premises. Despite the Commissioner (Appeals) upholding the disallowance, the Tribunal found that the services provided by specific companies were eligible for cenvat credit, including the construction of a new storage tank/pond, deemed an eligible capital asset under the rules. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and granting the appellant the cenvat credit of ?19,26,435/-.

In conclusion, the Tribunal allowed the appeal, holding that the appellant was eligible for cenvat credit for both construction and renovation/repair services, totaling ?26,90,753/-. The judgment emphasized the importance of correctly interpreting the nature of services provided and the eligibility criteria for cenvat credit, ultimately ruling in favor of the appellant and providing consequential benefits.