2017 (10) TMI 738 - AT - Central Excise

CENVAT credit - input services - Construction of Canteen, Storing Shed and Rest Shed within the factory premises - Held that - law was amended with effect from 01.04.2011 and prior to the said date the Construction Services have been held to be as cenvatable input service by catena of decisions of the Tribunal and admittedly, the credit was available prior to 04.04.2011 - Construction of Canteen, Storing Shed and Rest Shed are part of the factory and is required to be provided by the manufacturer for the welfare of its employees - during the relevant period the said services were proper eligible cenvatable services - credit allowed. Time limitation - Held that - the issues involved interpretation of law and the credits were availed reflecting the same in the statutory records and requisite returns were also being filed with the Revenue, no malafide can be attributed to the appellant so as to invoke the longer period of limitation - the demand is barred by limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Availability of Cenvat credit on service tax paid for construction services within factory premises, denial of credit based on law amendment, denial of credit for Association Services, limitation aspect for availing credits.

1. Availability of Cenvat Credit on Construction Services:
The dispute revolved around the availability of Cenvat credit of service tax paid on the construction of canteen, storing shed, and rest shed within the factory premises during 2010-13. The lower authorities denied the credit citing an amendment in the law effective from 01.04.2011, excluding these services from the definition of "input services" even before the amendment. However, the tribunal referenced previous decisions, notably the case of Maruti Suzuki India Ltd. vs Commissioner of Central Excise, where construction services were considered cenvatable. The tribunal held that these services were essential for the welfare of employees and had a nexus with the manufacturing process, thus ruling in favor of the appellant.

2. Denial of Credit for Association Services:
A small credit, around &8377; 25,000, for association services availed by the assessee was rejected. The tribunal referred to the Maruti Suzuki India Ltd. case where Cenvat credit for association services was denied. However, the appellant challenged the demand on the grounds of limitation.

3. Limitation Aspect for Availing Credits:
The limitation aspect applied to both issues of construction services and association services. The credits for construction services were availed before 04.04.2011 and for association services on 30.09.2011, while the show-cause notice was issued on 23.03.2015. Since the interpretation of law was involved, and the credits were reflected in statutory records with requisite returns filed with the Revenue, no malafide intent was attributed to the appellant. Consequently, the demand was deemed barred by limitation.

Conclusion:
The tribunal set aside the impugned orders and allowed the appeals, providing consequential relief to the appellants. The judgment highlighted the importance of considering the nexus of services with the manufacturing process and the interpretation of law in determining the availability of Cenvat credit, while emphasizing the significance of the limitation aspect in such cases.