2018 (10) TMI 1320 - AT - Central Excise

CENVAT Credit - input service - Construction Service or repair and maintenance service - scope of amendment in the definition of Input Service under Rule 2(l) of Cenvat Credit Rules - Held that - There is no dispute that the credit is admissible in respect of Construction Services used for Repair and Maintenance. From the nature of service of the service provider, it is found that it is not a new construction of building but in the existing building some civil work was carried out. It is also observed that the service provider discharging the service tax liability by claiming abatement of 30% which is available on Repair and Maintenance . Therefore, the service provider is classifying the services under Repair and Maintenance - As per Rule 2(l), even though the Construction Service was excluded but in the inclusion clause of definition, the services such as Modernisation, Renovation and Repair of the factory premises of manufacturer is still covered under the definition of Input Service. Service of Repair and Maintenance are eligible for Cenvat credit - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Eligibility of Cenvat credit in respect of Construction Service.

Analysis:
The case revolved around the eligibility of Cenvat credit concerning Construction Service, specifically focusing on whether the appellant was entitled to the credit following an amendment in the definition of Input Service under Rule 2(l) of Cenvat Credit Rules. The department contended that Construction Service was excluded from the definition of Input Service, thus disqualifying the appellant from claiming Cenvat credit.

The appellant, represented by Shri Vinay Kansara, argued that they had availed credit based on invoices from various Construction Companies for services such as Repair and Maintenance, Renovation, and Modernization on the existing plant. It was highlighted that service tax was paid under the category of Repair and Maintenance for all services provided, with the service provider availing a 30% abatement for Repairs and Maintenance. The appellant referenced a previous Tribunal order that allowed credit on Construction Service used for Repairs and Maintenance, supporting their claim for admissible credit.

On the other hand, Shri T.K. Sikdar, Assistant Commissioner (AR) for the Revenue, reiterated the findings of the impugned order, emphasizing that the services provided were for civil work like internal plaster and concrete for foundation, which the Commissioner (Appeal) deemed as not falling under Repair and Maintenance service based on specific invoices.

After considering the arguments from both sides and examining the invoices of the service provider, it was observed that the services rendered were not for new construction but involved civil work on existing buildings, with the service provider categorizing the services under Repair and Maintenance and claiming a 30% abatement. The Tribunal noted that services related to Modernization, Renovation, and Repair of factory premises were still covered under the definition of Input Service despite the exclusion of Construction Service. Therefore, the services of Repair and Maintenance were deemed eligible for Cenvat credit. Consequently, the impugned order was set aside, and the appeal was allowed.

In conclusion, the judgment clarified the eligibility of Cenvat credit for Construction Services used for Repair and Maintenance, emphasizing the interpretation of the inclusive part of the definition of Input Service and the specific nature of the services provided in the case at hand.