2023 (5) TMI 185 - AT - Central Excise

Tribunal grants cenvat credit for fabrication and maintenance services.

M/s CIPLA Limited Versus Commissioner of CGST & Excise, Siliguri

The Tribunal allowed the appeal, finding in favor of the appellant regarding the denial of cenvat credit on input services for fabrication and erection of ... CENVAT Credit - input service - miscellaneous constructions, fabrication and erection of pipes, supply and installation of CGI shed in DG yard - HELD THAT:- It is noticed that the services received by the appellant from M/s Sunanda Agri Marketing, are in the nature of fabrication and erection of pipes fittings and the services received from M/s Friends Traders, are in the nature of repair and maintenance in the factory premises. The appellants have specifically pleaded that the said services were essentially required for modernization, renovation or repairs of within factory premises. They are not a part of in execution of works contract or construction services as envisaged under Section 66E (b) of the Finance Act, 1944. It’s an admitted position that the said services are used for repair/renovation of and within the factory premises and were not a part of construction or execution of a works contract as in the nature for construction of civil structures and buildings. Admissibility of CENVAT Credit is now a settled proposition in law. As the appellants have availed the input service tax credit for repair, maintenance and modernization and fabrication & erection of pipe fittings at their factory premises, it is amply clear that the aforesaid credit is admissible to them and are not hit by exclusion clause of Rule 2 (1)(ii)(A) of the Cenvat Credit Rules, 2004. Appeal allowed. Issues involved: Appeal against Order-in-Appeal regarding denial of cenvat credit on input services for fabrication and erection of pipes, repair and maintenance in factory premises.Issue 1: Denial of cenvat credit on input servicesThe appellant, engaged in manufacturing pharmaceuticals, had taken cenvat credit on various inputs and input services during 2012-13 and 2013-14. The adjudicating authority upheld the demand raised and imposed penalty under Section 11AC of the Central Excise Act, 1944. The appeal filed by the appellant before the Commissioner (Appeals) was allowed, confirming the duty demand but disallowing input service tax credit of Rs.2,77,703 on miscellaneous constructions, fabrication, erection of pipes, and CGI shed installation. The Commissioner (Appeals) denied the cenvat credit under Rule 2 (1)(ii)(A) of the Cenvat Credit Rules, 2004, stating that the services were excluded from the definition of input services.Issue 2: Admissibility of cenvat credit on specific servicesThe services received by the appellant for fabrication and erection of pipes fittings and repair and maintenance in the factory premises were deemed necessary for modernization, renovation, or repairs within the factory premises. These services were not part of works contract or construction services as specified under the Finance Act, 1944. The appellant's advocate cited Board Circular No.943/4/2011-CX and highlighted that similar credit was allowed for their sister unit in a previous order. The Tribunal noted that the services were used for repair, maintenance, modernization, and fabrication at the factory premises, making the credit admissible and not falling under the exclusion clause of Rule 2 (1)(ii)(A) of the Cenvat Credit Rules, 2004.In conclusion, the Tribunal found in favor of the appellant, stating that the cenvat credit on the input services for repair, maintenance, modernization, and fabrication at the factory premises was admissible. The appeal succeeded with consequential relief granted to the appellant.