2018 (5) TMI 1041 - AT - Central Excise

Tribunal Allows CENVAT Credit for Service Tax on Tours & Travels, Clarifies Construction Services Eligibility

The Tribunal allowed CENVAT credit for service tax paid on Tours and Travels for official work, overturning the denial by lower authorities. The issue of ... CENVAT credit - input services - Tours and travels service - construction services - Held that: - the chart which is produced by the learned Counsel before the Tribunal, specifically indicates that the employees concerned had travelled for official work. If the employees have travelled for official work, and period being prior to 01-04.2011, CENVAT Credit needs to be allowed as covered in the definition of input services during the period in question, as the inclusive portion of definition indicates any services used in relation to business activity and the service tax paid on such services are eligible for CENVAT Credit - credit allowed. CENVAT Credit of ₹ 5,16,557/- on construction services - denial on the ground that these services were rendered for the housing complex and the residential colony - Held that: - in order to meet ends of justice, appellant is extended an opportunity to substantiate their claim that the cost of these construction services was considered for arriving at the final price of the goods manufactured - matter remitted back to the adjudicating authority to reconsider the issue afresh after following due process law. CENVAT Credit of ₹ 25,20,383/- and ₹ 2,08,821/- in respect of construction services - denial on the ground that the service tax is paid on construction services which are excluded from the definition of input services - Held that: - he definition of input services, post 01.04.2011, indicates that CENVAT Credit of the service tax paid on construction services used for construction of building or civil work or part thereof is excluded as also the services rendered for making structure to support of capital goods - The exclusive clause in definition of input service under rule 2(l) of Cenvat Credit Rules, 2004 post 01.04.2011 will not be attracted in the case in hand as factually it is noticed that these services were used for repair and renovation of the factory - credit allowed. Penalty - Held that: - the issue involved in this case is regarding interpretation of the provisions, appellant need not to be visited with any penalty under any provisions. Appeal allowed - decided in favor of appellant. Issues:- Eligibility of CENVAT credit for service tax paid on input services related to Tours and Travels- Eligibility of CENVAT credit for service tax paid on construction services used for housing complex and residential colony- Interpretation of the definition of input services under CENVAT Credit Rules, 2004Analysis:1. Eligibility of CENVAT credit for service tax paid on input services related to Tours and Travels:The appellant claimed CENVAT credit for service tax paid on Tours and Travels for official work. The lower authorities denied the credit, stating it did not qualify as input services. The Tribunal found that the employees traveled for official work, making them eligible for CENVAT credit. The denial of credit amounting to &8377;78,965 was deemed incorrect and allowed.2. Eligibility of CENVAT credit for service tax paid on construction services used for housing complex and residential colony:The appellant sought credit for construction services used for housing complex and residential colony, which was disallowed by lower authorities. The Tribunal remitted the issue back to the adjudicating authority for reconsideration. It provided an opportunity for the appellant to substantiate that the cost of these services was included in the final product's cost, emphasizing the need for due process of law.3. Interpretation of the definition of input services under CENVAT Credit Rules, 2004:Regarding CENVAT credit for construction services used for repairs and renovations of the factory premises, the Tribunal held that post-amendment, certain construction services were excluded from input services. However, it noted that the services in question were for repair and renovation, not construction of new structures, making them eligible for credit. The Tribunal relied on a CBEC circular to support its decision, allowing the appellant to avail CENVAT credit for the specified construction services.4. Penalty Consideration:Given the interpretational nature of the issues, the Tribunal decided that no penalty should be imposed on the appellant under any provisions. This decision was based on the complexity of interpreting the provisions rather than any intentional violation.5. Conclusion:The Tribunal disposed of the appeals by allowing CENVAT credit for Tours and Travels, remitting the issue of construction services back for reconsideration, and granting credit for specific construction services used for repairs and renovations. The decision highlighted the importance of substantiating claims and following due process in determining CENVAT credit eligibility.