2017 (3) TMI 517 - AT - Service Tax

CENVAT credit - services used for erection, commissioning and installation - denial on the ground that appellant have artificially split a single individual contract into two separate contracts with the intent to wrongly availing CENVAT Credit - Held that - Commissioning and installation are separate activity and the value of the same cannot be included in the assessable value of the goods. The Deputy Commissioner s report is very clear that the appellants are engaged in providing services of commissioning and installation and they have availed credit only to those services which are used in the said activity - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of CENVAT Credit for services used in manufacturing and installation.
2. Allegation of artificially splitting a single contract to avail CENVAT Credit.
3. Invocation of extended period of limitation.
4. Exemption of goods from excise duty affecting CENVAT Credit eligibility.

Analysis:

1. The case involves M/s GMP Technical Solutions Pvt. Ltd., engaged in manufacturing and installation of clean partitions. They availed CENVAT Credit amounting to ?37,54,817 for services used in erection, commissioning, and installation. A show-cause notice was issued, alleging artificial splitting of a contract to wrongly avail the credit. The lower authority confirmed the demand, leading the appellants to appeal before the Tribunal.

2. Despite the appellant's absence during the proceedings, their grounds of appeal contested the invocation of the extended period of limitation. They argued against the denial of CENVAT Credit due to the exemption of some goods from excise duty. The appellant clarified that they only claimed credit for services related to erection, commissioning, and installation, not for manufacturing exempted goods. They also disputed the allegation of artificially splitting the contract and highlighted the absence of the Deputy Commissioner's report copy.

3. The Tribunal examined the Deputy Commissioner's report, which confirmed that the appellant did not provide exempted output services at their Baddi Division. The report clarified that the CENVAT credit availed was for taxable output services, not for manufacturing exempted goods. It was noted that the appellant maintained separate stock registers for exempted turnover. The Tribunal rejected the argument that commissioning and installation costs should be included in the assessable value of goods, emphasizing that these were distinct activities. The Deputy Commissioner's report supported that the appellant availed credit only for services used in commissioning and installation.

4. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of M/s GMP Technical Solutions Pvt. Ltd. The judgment emphasized the clear distinction between manufacturing and installation activities, affirming the eligibility of CENVAT Credit for services related to commissioning and installation, even if some goods were exempted from excise duty.

This detailed analysis reflects the Tribunal's decision to overturn the lower authority's ruling based on the specific circumstances and legal arguments presented in the case.