2018 (3) TMI 246 - AT - Central Excise

CENVAT credit - construction of building or a civil structure or part thereof - laying of foundation for making of structures for support of capital goods - Held that - to come to a clear conclusion whether the Service Tax credit availed by the appellant is hit by the amendment made to Cenvat Credit Rules with effect from 1.4.2011, it will be necessary to go through in detail the various Annual Maintenance Contracts executed by the appellant for different periods. It will also be necessary to go through, in detail, the various invoices based on which such Cenvat credits have been availed. We find that this forum will not be able to carry out such verification. The matter remanded to the adjudicating authority to carefully consider the submissions made by the appellant vis-a-vis the relevant contracts and invoices and come to a conclusion de novo - appeal allowed by way of remand.

Summary

Issues:
Claim of Cenvat credit on civil construction post amendment effective from 1.4.2011.

Analysis:
The appellant, engaged in manufacturing medicines and pharmaceutical items, filed appeals against Order-in-Original No.34-41/2017 dated 31.1.2017 covering the period from 1.4.2011 to June 2016. The appellant claimed Cenvat credit under Rule 2(l) of Cenvat Credit Rules, 2004, based on Annual Maintenance Contracts, which included civil construction work. However, an exclusion clause was inserted in the Rules effective from 1.4.2011, disallowing credit for construction of buildings or civil structures. The appellant contended that they did not avail Cenvat credit on civil construction services post 1.4.2011 and had informed the department accordingly.

The department argued that the credit was denied for input services like fabrication work, dismantling and erection work, aluminium partition, and civil work, not covered under the amended Rule 2(l). The Tribunal noted that Cenvat credit was allowed for the period from August 2006 to March 2011, with the dispute arising post-amendment in April 2011. The appellant's Annual Maintenance Contracts were reviewed, revealing no clear evidence of civil construction services. The Tribunal acknowledged the need for detailed examination of the contracts and invoices to determine the eligibility of the Cenvat credit post-amendment.

Due to insufficient details in the appeal record regarding the contracts and invoices, the Tribunal remanded the matter to the adjudicating authority for a fresh consideration. The appellant was granted an opportunity for a de novo hearing to present their case effectively. Consequently, the impugned order was set aside, and the appeal was allowed by way of remand for further assessment based on comprehensive verification of relevant documents.

In conclusion, the Tribunal emphasized the necessity of a thorough review of the appellant's contracts and invoices to ascertain the eligibility of the Cenvat credit post-amendment. The remand was deemed essential for a detailed examination of the submissions and relevant documents, ensuring a fair and informed decision by the adjudicating authority.