2020 (8) TMI 2 - AT - Central Excise

Court allows appeal for cenvat credit on repair services for factory steelworks; Board Circular key.

Hindustan Zinc Limited Versus Commissioner, Central Goods & Service Tax

The appeal focused on the allowability of cenvat credit for repair and maintenance services used in steel structural works in a factory. The Court allowed ... CENVAT Credit - input services - repair and maintenance services utilised for dismantling steel structural works, fabrications & erection of columns, trusses, monkey ladder, strengthening of existing structure, maintenance of tailing line, drilling and sand blasting, carried out in the factory premises of the appellant - manufacture of zinc lead which are taxable output - Board Circular No. 943/4/2011-CX dated 29.04.2011 HELD THAT:- The input services are not hit by the exclusion clause (A) in Rule 2(l) of Cenvat Credit Rules, 2004 in view of the inclusive part of the definition input service, read with the clarification given by the Board dated 29.04.2011. Appeal allowed - decided in favor of appellant. Issues involved:Allowability of cenvat credit for repair and maintenance services utilized in steel structural works, fabrications, and erection of various items in a factory engaged in the manufacture of taxable output.Analysis:The issue in this appeal pertains to the allowability of cenvat credit for repair and maintenance services used in dismantling steel structural works, fabrications, erection of columns, trusses, monkey ladder, strengthening of existing structures, maintenance of tailing line, drilling, and sand blasting in the factory premises of the appellant. The Court below disallowed the credit for the period October 2015 to September 2016, amounting to Rs. 17,66,004, citing exclusion clause (A) of rule 2(l) of CCR, 2004. The Adjudicating Authority held that these services are not related to the manufacture and clearance of the final product, thus not admissible for cenvat credit. However, the appellant argued that as per Board Circular No. 943/4/2011-CX, credit for input services used for repair or renovation of factory or office is allowed, as these services fall under the inclusive part of the definition of input services. The appellant also referenced a previous order where similar input services were deemed allowable.The appellant relied on the Board Circular and the previous order to support their claim that the cenvat credit for the mentioned services should be allowed. They argued that the services in question are covered under the inclusive part of the definition of Rule 2(l) of Cenvat Credit Rules, 2004, which includes services related to modernization, renovation, and repairs of the factory. The appellant highlighted that similar input services were previously held to be allowable for a specific period in a previous order. The Authorised Representative for the Revenue, however, stood by the decision in the impugned order disallowing the credit.After considering the arguments from both sides, the Member (Judicial) held that the input services in question are not affected by exclusion clause (A) in Rule 2(l) of Cenvat Credit Rules, 2004, especially in light of the clarification provided by the Board in 2011. Consequently, the appeal was allowed, overturning the impugned order concerning the specified items related to repair and maintenance services utilized in the factory premises.