2018 (2) TMI 1015 - AT - Central Excise

Tribunal remands case for reconsideration on CENVAT credit eligibility, emphasizes factual verification & legal principles

Commissioner, CE & ST (LTU), Mumbai Versus Reliance Industries Ltd.

The Tribunal set aside the decision and remanded the case to the Adjudicating Authority for reconsideration. The Tribunal emphasized the necessity to ... CENVAT credit - whether the respondent is entitled for CENVAT credit of service tax paid on various services received and used in the residential township located near their refinery and Petrochemical Complex at Jamnagar, Surat, Vadodara, & Nagothane? Held that: - services involved in the present case are related to construction, repairs and maintenance of residential complex - though the respondent had submitted CAS-4 certificate, both the Authorities have only went on interpretation of definition of input service as provided under Rule-2(l) of CCR 2004, to decide eligibility of credit - Both the Authorities below have not verified the factual aspects whether the expenses of various services used for construction, repair and maintenance of residential complex were included in the cost of the final product which were cleared on payment of duty. Matter needs reconsideration - appeal allowed by way of remand. Issues Involved:Whether the respondent is entitled to CENVAT credit of service tax paid on various services used in the residential township near their refinery and Petrochemical Complex.Analysis:The issue in the present appeals revolved around the entitlement of the respondent for CENVAT credit on service tax paid on services used in the residential township near their refinery and Petrochemical Complex. The Revenue, represented by Shri M.R. Melvin, argued that the services availed by the respondent were related to the construction of a residential complex and its maintenance, citing a previous decision by the Hon'ble Bombay High Court. On the other hand, Shri Vipin Jain, representing the respondent, contended that the issue had already been settled in the respondent's favor in a previous case where the Division Bench of the Tribunal allowed CENVAT credit for services related to the construction of a residential township. The respondent also produced a CAS-4 Certificate before the Adjudicating authority to support their claim.The Tribunal, after considering the arguments from both sides and examining the records, noted that the services in question pertained to the construction, repairs, and maintenance of a residential complex. While certain services related to residential complexes were previously disallowed by the Hon'ble Bombay High Court, a subsequent judgment by the same court allowed CENVAT credit if the cost of services was included in the final product's cost, following the precedent set by the Coca Cola judgment. The Tribunal observed that the Division Bench had previously allowed CENVAT credit for services provided for the construction of a residential township and its repair and maintenance based on the inclusion of expenses in the cost of the final product, as per the Cost Accountant certificate submitted by the respondent.However, the Tribunal found that both the Adjudicating Authority and the Commissioner (Appeals) had decided the eligibility of CENVAT credit based on the interpretation of the definition of input service under the CENVAT Credit Rules, 2004, without verifying whether the expenses for various services used in the construction, repair, and maintenance of the residential complex were indeed included in the cost of the final product cleared on payment of duty. Therefore, the Tribunal set aside the impugned order and remanded the matter back to the Adjudicating Authority for a fresh decision, emphasizing the need to verify the factual aspects and observe the principles of natural justice in the reconsideration process.In conclusion, the Tribunal's judgment highlighted the importance of verifying whether the expenses for services used in the construction, repair, and maintenance of a residential complex were included in the cost of the final product to determine the eligibility of CENVAT credit, emphasizing the need for a reconsideration by the Adjudicating Authority to ensure a fair decision based on factual verification and legal principles.