2019 (11) TMI 947 - AT - Central Excise

Tribunal grants appellant Cenvat credit for 2007-2010, ruling exclusion clause not retrospective

The Tribunal allowed the appeal, holding that the disallowed Cenvat credit of Rs. 2,89,414/- was admissible to the appellant for the period from 2007 to ... Cenvat credit admissibility - exclusion clause in definition of input service - commercial or industrial construction service exclusion - works contract service exclusion - retrospective operation of statutory amendmentCenvat credit admissibility - exclusion clause in definition of input service - retrospective operation of statutory amendment - Whether Cenvat credit availed by the appellant for the period April 2007 to March 2010 was admissible despite an exclusion later inserted in the definition of input service. - HELD THAT: - The original authority disallowed Cenvat credit on the basis that the exclusion for services described as 'commercial or industrial construction service' and 'works contract service' is covered by the definition of input service. The Tribunal observed that the exclusionary clause relied upon was introduced into the definition of input service under the Cenvat Credit Rules, 2004 with effect from 01.04.2011. The appellant's claim related to the period April 2007 to March 2010, prior to the effective date of the amendment. The Tribunal applied the principle that a statutory amendment which inserts an exclusion from credit is not retrospective in operation and therefore cannot be applied to transactions prior to its effective date. The Tribunal relied on the view expressed by the Punjab & Haryana High Court in Commissioner of Central Excise, Delhi-III V. Bellsonica Auto Components (India) Pvt.Ltd., where it was held (para 11) that the amendment was not retrospective. In light of that settled position, the Tribunal held that the credit disallowed by the original authority was admissible for the period in question and directed consequential relief.The appeal is allowed and the Cenvat credit of Rs. 2,89,414/- availed for April 2007 to March 2010 is held admissible; consequential relief to the appellants follows as per law.Final Conclusion: The Tribunal allowed the appeal, holding that the exclusionary amendment to the definition of input service effective from 01.04.2011 could not be applied retrospectively to disallow Cenvat credit claimed for April 2007 to March 2010; consequential relief is granted. Issues involved: Disallowance of Cenvat credit based on exclusion clause in Rule 2(l) of Cenvat Credit Rules, 2004 for 'commercial or industrial construction service' and 'works contract service' during the period from April 2007 to March 2010.Analysis:1. The main issue in this case was the disallowance of Cenvat credit amounting to Rs. 2,89,414/- by the original authority, citing the exclusion clause in Rule 2(l) of Cenvat Credit Rules, 2004 for 'commercial or industrial construction service' and 'works contract service' during the period from April 2007 to March 2010.2. The appellant's counsel argued that the exclusion clause was inserted in the definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004 w.e.f. 01.04.2011, and hence, not applicable to the period in question. The counsel also relied on a ruling by the Punjab & Haryana High Court in a similar case.3. The Tribunal noted that the exclusion clause in question was indeed inserted w.e.f. 01.04.2011, and the Punjab & Haryana High Court had held that this amendment was not retrospective. Consequently, the Tribunal held that the disallowed credit of Rs. 2,89,414/- was admissible to the appellant, as the amendment was not applicable to the period from 2007 to 2010.4. Based on the settled legal position and the non-retrospective nature of the amendment, the Tribunal allowed the appeal, stating that the appellants were entitled to consequential relief as per law. The decision was pronounced in the open court, providing relief to the appellant in this matter.