Tribunal allows appeal for cenvat credit on Erection & Commissioning services for detergent manufacturing.

The Tribunal allowed the appeal in favor of the appellant regarding the entitlement to cenvat credit on Erection and Commissioning services for the manufacturing of detergent products. The Tribunal held that these services are covered under the main clause of the definition of input service, rejecting the revenue's contention that they fall under the exclusion clause. The impugned order was set aside, and the appeal was allowed on 31st July 2023.

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Issues:
The appeal challenges the Order-in-appeal dated 20.12.2022 passed by the Commissioner (Appeals), Customs & CGST and Central Excise, Indore, M.P. The main issue is whether the appellant is entitled to avail the cenvat credit on the services of Erection and Commissioning of Spray Drying Plant in terms of the definition of 'input service' as defined under Rule 2(l) of Cenvat Credit Rules, 2004.

Details of the Judgment:

Issue 1: Allegations of Wrong Availment of Cenvat Credit
The appellant was alleged to have wrongly availed cenvat credit on maintenance charges, erection and commissioning services, and capital goods. The adjudicating authority upheld the allegations related to the wrong availment of cenvat credit on Erection and Commissioning and supply of Baffle Plate. The Commissioner (Appeals) allowed the cenvat credit towards supply of Baffle Plate, leading to the present appeal challenging the disallowance of the cenvat credit towards Erection and Commissioning services.

Issue 2: Entitlement to Cenvat Credit on Erection and Commissioning Services
The appellant argued that the input service credit on the invoices of erection of plants is covered under the provisions of Cenvat Credit Rules, 2004, as it has a direct nexus with the manufacturing of detergent products. The revenue contended that these services fall under the exclusion clause of the definition of input service. The Tribunal analyzed the definition of 'input service' under Rule 2(l) and concluded that the exclusion clause does not apply to services of erection and commissioning since they are directly related to the manufacturing activity of the appellant. Previous tribunal decisions were cited to support the appellant's position, and it was held that the services of Erection of Detergent Spray Drying Plant are covered under the main clause of the definition of input service.

Conclusion:
The Tribunal set aside the impugned order and allowed the present appeal in favor of the appellant. Since the issue was decided on merits in favor of the appellant, the issue of limitation was deemed unnecessary to consider further. The appeal was accordingly allowed on 31st July 2023.

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