CESTAT grants waiver for Cenvat credit on Service Tax for construction services

The Appellate Tribunal CESTAT AHMEDABAD allowed the appellant's applications for waiver of pre-deposit of duty, interest, and penalty related to Cenvat credit on Service Tax paid for Commercial and Industrial Construction services. The Tribunal held that the appellant, engaged in manufacturing dutiable products, was eligible for the credit under Rule 6(5) of Cenvat Credit Rules, 2004, for the period before 1-4-2011, as the services were not used exclusively for exempted goods or services. Recovery was stayed pending appeal disposal, clarifying the interpretation of the rule.

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Issues Involved: Interpretation of Rule 6(5) of Cenvat Credit Rules, 2004 regarding eligibility for Cenvat credit on Service Tax paid for Commercial and Industrial Construction services.

In the judgment delivered by Appellate Tribunal CESTAT AHMEDABAD, the two Stay Petitions were filed seeking waiver of pre-deposit of duty, interest, and penalty amounting to Rs. 4,91,533. The issue in both petitions was the same, pertaining to the eligibility of the appellant to avail Cenvat credit on Service Tax paid by the service provider for Commercial and Industrial Construction services. The period in question was from 1-4-2008 to 31-3-2011. The lower authorities had ruled the appellant ineligible for the credit. The Tribunal noted that the services were provided in factory and residential premises, and the key issue was the interpretation of Rule 6(5) of Cenvat Credit Rules, 2004. The rule allowed credit unless the services were used exclusively for exempted goods or services. The rule was amended from 1-4-2011, and the services in question fell under the category of Commercial and Industrial Construction services. As the appellant was manufacturing dutiable products, the Tribunal held that Cenvat credit of Service Tax paid could not be denied to the appellant before 1-4-2011.

Therefore, the Tribunal allowed the applications for waiver of the amounts and stayed the recovery until the disposal of the appeals. The judgment provides clarity on the interpretation of Rule 6(5) of Cenvat Credit Rules, 2004, emphasizing that eligibility for Cenvat credit should not be denied if services are not used exclusively for exempted goods or services, especially when the appellant is engaged in manufacturing dutiable products.

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