2024 (12) TMI 464 - AT - Central Excise

CENVAT credit in respect of service of construction of silos for storage of clinker, fly ash silo /handling system and conveying and feeding system etc for cement plant - cenvat credit in respect of hotel accommodation service - denial of cenvat credit on the ground that the service involving fabrication, erection, commissioning and installation of fly ash silo/handling system, clinker silo, conveying and feeding system etc. for cement plant has no connection directly or indirectly related to the manufacture of final product or clearance of final product up to the place of removal. Credit of Rs. 54,73,269/- which is in respect of construction of silos for storage of clinkers etc - HELD THAT - The period involved is 2010-2011 to 2013-2014, in this regard the learned counsel pointed out that out of credit of Rs 54,73,269/-. the credit of Rs.51,27,194/- pertains to the period prior to 01.04.2011. When this be so, prior to 01.04.2011 no service was excluded from the definition of input service under Rule 2 (l) of Cenvat Credit Rules, 2004. Moreover, the construction of silos and erection, commissioning and installation thereof is directly used in or in relation to manufacture of final product as the said silos are used for storage of clinkers which is used in the manufacture of final product. Therefore, on one hand the said service is directly covered under the main clause of the definition of input service and on the other hand the exclusion if any applicable, it is only with effect from 01.04.2011. Therefore, the cenvat credit in respect of 51,27,194/- cannot be disputed. Credit is related to storage of raw material and the storage - to be included in the input services or not - HELD THAT - The appellant s submission agreed upon that there is no dispute that the silos are used in the storage of clinker therefore for this reason also credit is clearly admissible and the same will not fall under the exclusion clause even after 01.04.2011. It is also found that for the period 2010-2011, 2013-2014, the show cause notice was issued on 28.07.2014 covering the extended period. It is found that firstly the issue involved is of interpretation of definition of input service and appellant have been filing regularly their ER-1 returns wherein the availment of credit was declared. Therefore, there is no suppression of fact on the part of the appellant. Accordingly, apart from the merit, the demand for the extended period is not sustainable on the ground of time bar also. Cenvat credit in respect of hotel accommodation service - HELD THAT - On the same issue in the appellant s own case this tribunal has allowed the cenvat credit on hotel accommodation service in M/S. SHREE DIGVIJAY CEMENT COMPANY LTD. VERSUS C.C.C S. T-RAJKOT 2019 (3) TMI 1842 - CESTAT AHMEDABAD . The appellants are correctly and legally entitled for cenvat credit in respect of construction service, erection, commissioning, installation of silos, handling system and also hotel accommodation service. - the impugned order set aside - appeal allowed.

Summary

Issues:
1. Entitlement to cenvat credit for construction services related to silos and conveying systems for a cement plant.
2. Entitlement to cenvat credit for hotel accommodation services.

Analysis:

Issue 1: Entitlement to cenvat credit for construction services:
The appellant sought cenvat credit for services related to the construction of silos, handling systems, and conveying systems for a cement plant. The Adjudicating Authority denied the credit, stating that these services did not directly or indirectly relate to the manufacture of the final product. The appellant argued that the services were used for storage of raw materials essential for the manufacturing process, thus falling under the definition of input service. The appellant also contended that the exclusion of certain services from the definition of input service did not apply to the period before 01.04.2011. The Tribunal agreed with the appellant, emphasizing that the construction of silos directly contributed to the manufacturing process by storing raw materials. The Tribunal held that the credit for the period before 01.04.2011 could not be disputed, and even after the exclusion clause came into effect, services related to storage remained admissible.

Issue 2: Entitlement to cenvat credit for hotel accommodation services:
The appellant also claimed cenvat credit for hotel accommodation services used for business purposes. The Revenue contested this claim, but the appellant relied on previous tribunal orders that allowed such credits in similar cases. The Tribunal, considering the appellant's submissions and past decisions, concluded that the appellant was entitled to cenvat credit for both construction services and hotel accommodation services. The Tribunal set aside the impugned orders and allowed the appeals with consequential relief, affirming the appellant's entitlement to the credits.

In conclusion, the Tribunal ruled in favor of the appellant, holding that they were legally entitled to cenvat credit for the construction services related to silos and conveying systems for the cement plant, as well as for the hotel accommodation services used for business purposes. The Tribunal emphasized that the services were directly related to the manufacturing process and fell within the definition of input services, thereby allowing the appeals and granting consequential relief to the appellant.