Tribunal grants relief, allows appeal for Cenvat credit on Coal Handling Plant services. Penalties invalidated.

The Tribunal allowed the appeal, setting aside the demand order and granting relief to the appellant. It held that services for setting up the Coal Handling Plant (CHP) were eligible for Cenvat credit. The penalties and interest imposed were invalidated. The Tribunal found the extended period of limitation invocation unjustified.

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Issues Involved:
1. Denial of Cenvat Credit on services for setting up of Coal Handling Plant (CHP).
2. Imposition of penalty and applicable interest.
3. Invocation of extended period of limitation.

Detailed Analysis:

1. Denial of Cenvat Credit on services for setting up of Coal Handling Plant (CHP):
The appellant, a subsidiary of Coal India Limited, engaged in mining and selling coal, availed Cenvat credit on services used for setting up a Coal Handling Plant (CHP) for modernizing the coal loading process. The Ld. Commissioner denied the credit, arguing that the contract was predominantly for construction of structural works, which falls under the exclusion clause of input service. The appellant contended that the contract was a turnkey project involving planning, designing, engineering, construction, fabrication, supply, erection, trial run, commissioning, and testing of the CHP, not merely civil works. They argued that the essence of the contract was to modernize the coal loading process, which is eligible for credit under the definition of input service. The Tribunal noted that the services used for setting up the CHP were for modernizing the coal loading process, which is specifically included in the definition of input service. The Tribunal also referred to the decision in Pepsico India Holdings (P) Ltd, which held that services used for setting up a factory are eligible for credit even after the definition change post 01.04.2011. The Tribunal applied the "user test" principle, concluding that the services used for setting up the CHP are eligible for Cenvat credit.

2. Imposition of penalty and applicable interest:
The appellant contested the imposition of penalty and interest, arguing that there was no fraud or suppression involved. The Tribunal did not find any specific discussion on this issue in the judgment, but the setting aside of the demand order implies that the penalties and interest related to the denied credit were also invalidated.

3. Invocation of extended period of limitation:
The appellant also contested the invocation of the extended period of limitation. The Tribunal's decision to set aside the demand order suggests that the extended period of limitation was not justified in this case.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned demand order and granting consequential relief to the appellant. The Tribunal held that the services used for setting up the CHP for modernizing the coal loading process are eligible for Cenvat credit, and the mode of valuation adopted by the Contractor for discharging service tax on 40% of the contract value was in accordance with the law. The penalties and interest imposed were also invalidated as part of the judgment.

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