2022 (9) TMI 1293 - AT - Central Excise

CENVAT Credit - input services - Repair and maintenance of factory/ office premises/plant and machinery - GTS Services - credit availed on the strength of invoices for freight for receipt of input/ fuel, issued by the supplier / trader - HELD THAT - Admittedly appellant have received the construction service towards repair and maintenance carried out in the factory premises. The repair and maintenance have been specifically provided as input service in the in the inclusive clause of the definition, which provides for credit with regard to services received for repair of a factory or office relating to such factory. Further, this issue is squarely covered by the precedent order of this Tribunal in appellant s own case M/S. BALKRISHNA INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL GOODS SERVICE TAX AND CENTRAL EXCISE, ALWAR. 2021 (7) TMI 1383 - CESTAT NEW DELHI , where it was held that the appellant is entitled to cenvat credit on repair and maintenance services received for repair and maintenance of plant and machinery, in the factory premises. GTA Service - HELD THAT - Admittedly it is the appellant manufacturer who are the receiver of the input service in question. It is immaterial as to who deposited the service tax, as it is specifically mentioned in the invoice of the supplier that service tax of GTA service has been deposited on the freight element. It is also found that the Court below has held that service tax has been deposited in respect of GTA service in question. Accordingly, the appellant is entitled to cenvat credit on the same. The appeal is allowed - decided in favor of appellant.

Summary

Issues:
- Denial of cenvat credit on repair and maintenance services for factory/office premises/plant and machinery.
- Denial of cenvat credit on service tax for freight invoices related to receipt of input/fuel.

Analysis:

1. Denial of Cenvat Credit on Repair and Maintenance Services:
The appellant, engaged in manufacturing pneumatic tyres, faced denial of cenvat credit on repair and maintenance services during an audit for the period between May 2012 and March 2015. The audit revealed that the services availed, such as civil work, steel structure erection, gate fixing, and fabrication work, were deemed ineligible as they fell under works contract services, excluded from the definition of "input service." The initial show cause notice proposed a recovery of Rs. 6,48,346 for construction services and Rs. 9,312 for service tax on freight. Despite a prior round of litigation, where the demand was confirmed, the appellant argued that the repair and maintenance services were essential for manufacturing dutiable finished products and should qualify as input services. The appellant cited relevant precedents and rulings to support their claim.

2. Denial of Cenvat Credit on Service Tax for Freight Invoices:
Another issue revolved around the denial of cenvat credit on service tax for freight invoices related to the receipt of non-calcined Grade 'A' petroleum coke used as fuel. The appellant had availed cenvat credit based on invoices where service tax was not charged but included in the amount. The subsequent show cause notice aimed to disallow the service tax amount of Rs. 9,312, as it was not specifically charged in the invoices. The Assistant Commissioner confirmed the demand, stating that the consignor had paid the service tax on freight, making the credit available only to them. However, the appellant contended that as the recipient of the GTA service, they were entitled to the credit, regardless of who paid the service tax. The appellant argued that the denial of credit was against the direction of the superior authority and sought relief based on this argument.

3. Judgment and Decision:
The Member (Judicial) analyzed the contentions of both parties and held that the repair and maintenance services received by the appellant qualified as input services under the Cenvat Credit Rules. The Member noted that repair and maintenance were explicitly included in the definition of input services, and the services provided were necessary for the manufacturing process. Additionally, the Member found that the appellant was entitled to cenvat credit on the GTA service for transportation of fuel, regardless of who deposited the service tax. The judgment set aside the impugned order, allowing the appeal and granting the appellant consequential relief in accordance with the law.

In conclusion, the judgment favored the appellant by recognizing the eligibility of cenvat credit on repair and maintenance services and service tax for freight invoices, emphasizing the importance of these services in the manufacturing process and upholding the appellant's right to claim the credit as the recipient of the services.