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2019 (3) TMI 242 - AT - Central ExciseCENVAT Credit - input services - erection, erection & commissioning services - construction services - insurance services - Rule 2(l) of CENVAT Credit Rules, 2004 - Held that - With regard to erection, erection & commissioning, even after amendment w.e.f. 01/04/2011 falls under the definition of input service whereas only a civil construction has been excluded. Further, the appellant has paid the entire service tax before the issue of show-cause notice and therefore the demand of interest and imposition of penalty is not warranted. Further, after the amendment in the definition of input service, only the civil construction which is only a part of it as per the Annexure to the show-cause notice is only excluded whereas insurance, erection, erection & commissioning fall under the definition of input service and the appellant is entitled to take CENVAT credit of the same. Appeal allowed in part and part matter on remand.
Issues:
- Appeal against rejection of CENVAT credit of output services like construction and insurance services. - Interpretation of Rule 2(l) of CENVAT Credit Rules, 2004. - Applicability of input services definition to services like erection and commissioning. - Justifiability of interest and penalty imposition. - Determination of eligible CENVAT credit for the appellant. Analysis: The appeal challenged the Commissioner(Appeals) order rejecting CENVAT credit of output services, including construction and insurance services, by the appellant, a Sponge Iron manufacturer. The dispute arose from a show-cause notice proposing recovery of service tax, interest, and penalty due to availing CENVAT credit on excluded services under Rule 2(l) of CENVAT Credit Rules, 2004. The Assistant Commissioner confirmed the demand, leading to the appeal. The appellant argued that the impugned order failed to appreciate facts and law, emphasizing discrepancies in service descriptions and the eligibility of services like erection and commissioning under the input services definition. The appellant cited relevant legal precedents to support their case. The appellant contended that the disallowed CENVAT credit on insurance premium and services related to erection and commissioning were unjustified, as they fell within the scope of input services. The appellant had paid the demanded amount and interest before the show-cause notice, questioning the imposition of additional penalty. The appellant's arguments were supported by invoices and the show-cause notice descriptions, highlighting the inclusion of erection and commissioning services. The appellant's counsel referenced legal judgments to assert the eligibility of the disputed services for CENVAT credit. The respondent defended the impugned order, pointing out references to construction in the show-cause notice. However, the Tribunal, after considering submissions and evidence, found that services like erection and commissioning, post-amendment, were not excluded from input services definition, unlike civil construction. The Tribunal also noted the appellant's pre-payment of service tax, leading to the conclusion that interest and penalty imposition was unwarranted. Consequently, the Tribunal partly allowed the appeal, excluding CENVAT credit only on construction services and remanding the matter for quantification purposes. The appellant was deemed entitled to CENVAT credit for insurance, erection, and commissioning services, as per the revised interpretation of input services definition. In summary, the Tribunal's decision clarified the eligibility of CENVAT credit for disputed services, emphasizing the post-amendment inclusion of erection and commissioning under input services. The judgment highlighted the importance of accurate service descriptions and adherence to legal provisions in determining CENVAT credit applicability, ultimately providing relief to the appellant while remanding the matter for quantification.
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