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2024 (12) TMI 158 - AT - Service TaxCENVAT Credit - input services used in modernization and renovation of the plant - present dispute pertains to April 2009 to March 2011 - HELD THAT - As per the definition available during the relevant period, all activities relating to business were eligible for credit. We also find that all input services used in respect of modernization, renovation and repair of factory had been specifically included as eligible for credit. Thus, it is observed that the input service credit availed by the Appellant squarely falls within the definition of input service in terms of Rule 2(l) of the CENVAT Credit Rules, 2004. Accordingly, the Appellant is eligible for the credit on the input services availed by them. This view has been taken by the Tribunal in the case of M/S MARUTI SUZUKI INDIA LTD. VERSUS CCE, DELHI-III (VICE-VERSA) 2016 (10) TMI 648 - CESTAT CHANDIGARH wherein it has been observed ' denial of credit on construction service to the appellant is not legally sustainable as the period involved is prior to amendment in Rule 2(l) made on 1-4-2011.' The input services used by the Appellant are eligible for credit - the demand confirmed in the impugned order is set aside - Since the demand itself is set aside, the question of demanding interest or imposing penalties does not arise - appeal allowed.
Issues:
Eligibility of CENVAT Credit on input services used in modernization and renovation of the plant. Analysis: The Appellant, engaged in manufacturing sponge iron, availed CENVAT Credit on input services for modernization and renovation. A Show Cause Notice was issued proposing to deny the credit. The impugned Order confirmed the demand, imposing a penalty. The Appellant appealed, arguing that the services used were eligible as per the definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004. They cited precedents supporting their contention. The Revenue reiterated the findings of the impugned order. The issue revolved around the eligibility of the Appellant to avail credit on input services used for modernization and renovation. The relevant period was April 2009 to March 2011. The definition of 'input service' during that period included all activities relating to business and services used for modernization and renovation of a factory. The Tribunal held that the Appellant's credit fell within this definition, making them eligible for the credit. In supporting their decision, the Tribunal referenced the case of Maruti Suzuki India Ltd., where a similar issue was resolved in favor of the taxpayer. The Karnataka High Court in Toyota Kirloskar Motor Pvt. Ltd. v. Commissioner of C.Ex., LTU, Bangalore, emphasized the broad scope of 'input service,' including activities not directly related to manufacturing. Similarly, in Commissioner of C.Ex., Nagpur v. Ultratech Cement Ltd., it was clarified that services integral to the business, even if not directly linked to manufacturing, qualify as input services. Based on the precedents and the expansive definition of 'input service,' the Tribunal concluded that the Appellant's input services were eligible for credit. Consequently, the demand was set aside, and no interest or penalties were imposed. The appeal was allowed in favor of the Appellant.
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