2014 (11) TMI 578 - AT - Central Excise

Tribunal rules CENVAT credit for Erection, Installation, and Commissioning services admissible

M/s. Radhe Renewable Energy Development Pvt. Limited Versus Commissioner of Central Excise & ST., Rajkot

The tribunal allowed the appeal, ruling in favor of the appellant on both the merits and time-bar grounds. It held that CENVAT credit on Input Services ... Denial of CENVAT Credit - Input services - Place of removal - Whether the demands regarding denial of CENVAT credit on Installation and Erection services availed by the appellant are sustainable or not - Invocation of extended period of limitation - Held that:- Appellant’s case is covered by the main body of the definition of ‘Input Services’ and it has to be held that servicers availed by the appellant are in relation to the manufacturing of the excisable goods. The case laws of Quality Steel Tubes (P) Limited vs. CCE UP (1994 (12) TMI 75 - SUPREME COURT OF INDIA), Thermax Limited vs. CCE (1998 (4) TMI 134 - SUPREME COURT OF INDIA) and Maruti Suzuki Limited vs. CCE, Delhi-III (2009 (8) TMI 14 - SUPREME COURT), relied upon by the learned AR are not applicable to the facts and circumstances of the present proceedings as the same were delivered either with respect to eligibility of CENVAT credit as ‘Inputs’ or for determining assessable value under Section 4 of the Central Excise Act, 1944 and were not with respect to eligibility of CENVAT Credit on ‘Input Services’. It is now a settled legal position that cevnat credit on ‘Input Services’ is also admissible if the same are availed beyond the ‘place of removal’ provided such services are availed in relation to manufacture. - extended period cannot be invoked and accordingly, there is no point in imposition of penalties upon the appellant. - Decided in favour of assessee. Issues Involved:1. Whether CENVAT credit of Input Services for Installation/Erection of Gasifier Plant at customer's premises is admissible as a service availed in relation to their manufacturing activity under Rule 2(l) of the Cenvat Credit Rules, 2004.2. Whether the extended period and imposition of penalties are attracted against the appellant in the present facts and circumstances.Issue-wise Detailed Analysis:1. Admissibility of CENVAT Credit:The appellant argued that their contract for manufacturing and installing Gasifier plants is a composite contract including Designing, Engineering, Manufacture, Supply, Erection, Installation, and Commissioning. They contended that the entire contract value, including Erection, Installation, and Commissioning charges, is subject to Central Excise duty, and thus, CENVAT credit on these services should be admissible. The appellant supported their argument with several case laws, emphasizing that services related to Erection and Installation are integral to the manufacturing process.The respondent, representing the Revenue, countered that post-01.04.2008, the definition of 'Input Services' changed from 'from the place of removal' to 'up to the place of removal,' thereby excluding services availed beyond the place of removal from CENVAT credit eligibility. They argued that Erection, Installation, and Commissioning services are availed beyond the place of removal and are not related to the manufacturing activities.Upon review, the tribunal observed that the appellant's contracts are comprehensive, covering all activities from Designing to Commissioning, with no separate charges for Erection and Installation. The tribunal referenced the case of CCE Vapi vs. Alidhara Textool Engineers Pvt. Limited, where it was held that such services are incidental to manufacturing and thus eligible for CENVAT credit. The tribunal concluded that the appellant's services fall within the main body of the definition of 'Input Services' and are admissible for CENVAT credit.2. Extended Period and Penalties:The appellant argued that the demand is time-barred as the adjudicating authority acknowledged that before 01.04.2008, the definition of 'Input Services' included 'from the place of removal.' They also contended that the issue was contentious and not settled until the tribunal's decision in January 2009 in the case of CCE Vapi vs. Alidhara Textool Engineers Pvt. Limited.The respondent maintained that despite the change in the definition post-01.04.2008, the appellant continued to avail CENVAT credit incorrectly, justifying the invocation of the extended period and penalties.The tribunal noted that the issue was indeed contentious and decided in favor of the appellant in January 2009. Given the lack of evidence that this decision was reversed, the tribunal held that the extended period could not be invoked and penalties were not warranted.Conclusion:The appeal was allowed on both merits and time-bar grounds. The tribunal held that the CENVAT credit on Input Services for Erection, Installation, and Commissioning is admissible as these services are related to manufacturing. Additionally, the extended period for demand and penalties was not applicable due to the contentious nature of the issue and the appellant's interpretation being a possible one.