2018 (6) TMI 42 - AT - Central Excise

Works contract services received after 01.04.2011 - Service tax credit denied - period Jan 2013 to March 2013 - services used for setting up of factory after 01.04.2011, which is after amendment of CCR 2004 - Held that - Post 01.04.2011 the services were excluded from the purview of input services in terms of Rule 2(l) (ii) of CENVAT Credit Rules - credit rightly denied. GTA service - Input service credit - period June 2011 to March 2012 - denial on the ground that Sample invoices perused by the Commissioner (A) have not indicated that the applicant was under obligation to deliver the goods at customers place - Held that - These services are for the period June, 2011 to March, 2012 i.e. post 01.04.2008 - credit denied following the decision of Commissioner of Central Excise & Service Tax Vs. Ultra Tech Cement Ltd. 2018 (2) TMI 117 - SUPREME COURT OF INDIA wherein, it was held that outward transportation of goods from place of removal to buyer s premises post 01.04.2008 is ineligible for availment of CENVAT credit - credit denied. CENVAT credit - inputs - washer blanks, foundation bolts and nuts - period September 2010 to April 2011 - appellant have admitted that they were used for foundation work of storage tank, machinery and other civil work - Held that - The CENVAT credit availed on foundation bolts, washer blanks, etc., are ineligible as they are for the purpose of structural construction on shed/ building etc., however, CENVAT credit of the Central Excise duty paid on dust collection bags made from 100% Polyester Nonwoven Needle felt supplied by Genuine Filters & Fabrics are to be held has eligible for availment of CENVAT credit - credit allowed in part. CENVAT credit - duty paying documents - renting of immovable property service - period January, 2013 to August, 2013 - credit denied as the invoices were raised on their unit in sedam, Karnataka and not on the address of the appellant. Invoices didn t have all the particulars as required under CCR 2004 - Held that - The definition of the inputs and input services indicates that there should be directly or indirectly, in or in relation to the manufacture of the final products. In the case in hand, appellants were manufacturing cement at their Bollaram unit; even though production at Bollaram factory was suspended they had continued to maintain the lease premises with them, in anticipation that the Bollaram unit will start manufacturing after labour trouble is sorted out - the findings of the lower authorities that production was not taking place at Bollaram unit, hence, the CENVAT credit needs to be denied is incorrect proposition - credit allowed. CENVAT credit - period January, 2013 - Liaison Services, labour charges for erection, laying of cables from Jayasudha Enterprises and Scientific and Technical Consultancy Services from Bureau of Indian Standards, invoices of which were raised in their Sedam unit in Karnataka - Held that - These invoices were raised on their another unit, but the renewal was for various licences at Bollaram unit and the labour charges were paid for laying cables and various other activities in spite of the unit at Bollaram suspended - credit allowed. Penalty - Held that - Penalty seems to be unwarranted as the most of CENVAT credit availed by the appellants are allowed and denied by the Bench on the question of interpretation of eligibility to avail credit and the appellant had informed the Revenue Authorities by filing the returns regularly. Appeal allowed in part.

Summary

Issues involved:
1. Denial of service tax credit for works contract services received after a specific date.
2. Availment of credit on GTA services without clear indication of delivery obligation.
3. Availment of credit on specific items used for foundation work.
4. Denial of credit on renting of immovable property due to incomplete invoices and non-usage for manufacturing.
5. Availment of credit on liaison services, labor charges, and consultancy services.
6. Denial of credit on security services due to factory closure.

Issue 1: Denial of service tax credit for works contract services post-amendment
The appellant's appeal against the denial of service tax credit for works contract services received after 01.04.2011 was rejected. The services were used for setting up a factory after the amendment of CENVAT Credit Rules, 2004, making them ineligible for credit. The appellate tribunal agreed with the lower authorities' decision, citing the exclusion of such services from input services post-amendment.

Issue 2: Availment of credit on GTA services without clear delivery obligation
The appellant availed credit on GTA services for outward freight without clear indications of delivery obligations in the invoices. The tribunal upheld the decision to deny this credit, referencing a Supreme Court judgment that disallows CENVAT credit for outward transportation post a specific date.

Issue 3: Availment of credit on specific items used for foundation work
Credit availed on specific items like washer blanks, foundation bolts, and nuts, used for foundation work of storage tanks and machinery, was partially allowed. While credit on certain items was deemed ineligible, credit on dust collection bags for environmental purposes was considered eligible, as argued by the appellant.

Issue 4: Denial of credit on renting of immovable property
The denial of credit on renting immovable property services due to incomplete invoices and non-usage for manufacturing was challenged by the appellant. The tribunal overturned this decision, noting that the appellant had intentions to restart manufacturing at the leased premises, even during the period of factory closure due to labor issues.

Issue 5: Availment of credit on liaison services, labor charges, and consultancy services
The appellant's claim for credit on liaison services, labor charges, and consultancy services was supported by the tribunal. Despite invoices being raised at a different unit, the tribunal found the expenses related to the Bollaram unit's activities, making the appellant eligible for the credit.

Issue 6: Denial of credit on security services due to factory closure
The denial of credit on security services due to factory closure was contested by the appellant. The tribunal ruled in favor of the appellant, emphasizing that the services were utilized for maintaining security at the factory premises, even during the suspension of manufacturing activities.

The judgment highlighted various instances where the appellant's claims for CENVAT credit were either denied or partially allowed based on the specific circumstances and legal provisions. The tribunal carefully analyzed each issue, considering the arguments presented by both parties and relevant legal precedents. Ultimately, the tribunal partly allowed and partly rejected the appeal, directing the appellant to reverse/pay the denied credit amounts along with applicable interest. The penalty imposed on the appellant was deemed unwarranted, given the nature of the infractions and the regular filing of returns to inform the Revenue Authorities.