2019 (3) TMI 513 - AT - Central Excise

CENVAT Credit - input services - civil construction service done on works contract basis - period from 1.1.2016 to 31.3.2017 - Held that - It is seen that the works undertaken are in the nature of flooring works, fencing, gate post and charges for repairing work etc. It is very much clear from the documents that the works undertaken are in the nature of repair and maintenance work. The exclusion clause in the definition of input service excludes only works contract service which is in the nature of construction of civil structure, part thereof or laying of foundation or support structure for capital goods - The works undertaken by the appellant does not fall under this category. Further, the inclusion part of the definition allows service in the nature of repair and maintenance as well as modernization of factory / premises. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of CENVAT credit on input service tax for civil construction service under works contract basis.

Analysis:
1. Factual Background: The appellants, engaged in manufacturing steel and aluminum materials, availed CENVAT credit on input service tax for civil construction service under a works contract basis from 1.1.2016 to 31.3.2017. A show cause notice was issued to recover the credit amount of &8377;34,330, along with a penalty of &8377;5,000, which was confirmed by the original authority and upheld by the Commissioner (Appeals), leading to this appeal.

2. Appellant's Argument: The authorized representative for the appellant argued that the works undertaken were for repair and maintenance of the factory, not falling under works contract service. The activities, such as flooring, aluminum form monolithic flooring, fencing, and laying of gate posts, were essential for factory upkeep and modernization, falling within the definition of input service. Reference was made to a previous Tribunal decision in the appellant's favor based on similar facts.

3. Respondent's Submission: The authorized representative for the respondent supported the impugned order, contending that works like flooring are excluded under the definition of input service as works contract service. Any work related to civil structures is also excluded from the definition, which includes the works undertaken by the appellant.

4. Decision: After hearing both sides, the Tribunal observed that the works undertaken by the appellant, as evidenced by the invoices, were primarily for repair and maintenance purposes, not constituting works contract service for construction of civil structures or foundations. The Tribunal noted that the definition of input service includes activities related to repair, maintenance, and modernization of factory premises. Relying on precedent where similar credit was allowed, the Tribunal concluded that the services availed were eligible for credit. Consequently, the impugned order disallowing the credit was set aside, and the appeal was allowed with any necessary consequential relief.

(Judgment delivered by Ms. Sulekha Beevi C.S., Member (Judicial))