2023 (11) TMI 1164 - AT - Central Excise

CENVAT credit allowed for construction services during plant setup under Rule 2(l) of CCR 2004

CESTAT Chandigarh allowed the appeal regarding CENVAT credit eligibility for construction services during 2006-2010. The Tribunal held that construction ... CENVAT Credit - input services - construction of setting up of plant - period involved in the present case was from 2006 to 2010 - HELD THAT:- This issue is no more res-integra and various benches of the Tribunal has considered this issue and has consistently held that during the relevant period, the construction activity was very much covered under the definition of ‘Input Service’ as provided under Rule 2(l) of CCR, 2004. The Hon’ble Punjab and Haryana High Court in the case of COMMISSIONER CENTRAL EXCISE COMMISSIONERATE, DELHI-III VERSUS M/S BELLSONICA AUTO COMPONENTS INDIA P. LTD. [2015 (7) TMI 930 - PUNJAB & HARYANA HIGH COURT] have upheld the eligibility of the construction service for setting up the factory. This issue of eligibility of cenvat credit of construction service during the relevant period was held in favour of the assessee and by following the said decisions, the impugned order is not sustainable in law, and therefore, the same is set-aside by allowing the appeal of the appellant with consequential relief, if any, as per law. Appeal allowed. Issues Involved:1. Eligibility of input service tax credit on construction services for factory construction.2. Interpretation of the definition of 'Input Service' under Rule 2(l) of the Cenvat Credit Rules, 2004.3. Applicability of CBEC Board Circular No. 98/1/2008-ST dated 04.01.2008.Summary:1. Eligibility of Input Service Tax Credit on Construction Services:The appellant, engaged in manufacturing catalytic converters and door lock parts, was audited, revealing that input service tax credit on construction services related to factory construction was claimed. The Assistant Commissioner issued a Show Cause Notice for inadmissible credit amounting to Rs. 52,61,184/-, which was confirmed by the Commissioner of Central Excise, New Delhi. The appellant contested the order, arguing that the construction services fall within the definition of 'Input Service' under Rule 2(l) of CCR, 2004, and cited various Tribunal decisions supporting this view.2. Interpretation of the Definition of 'Input Service':The appellant argued that during the relevant period (2006-2010), the definition of 'Input Service' included services used in relation to setting up a factory. The definition was amended on 01.04.2011, excluding construction services, but the period in question was before this amendment. The Tribunal reviewed the definition of 'Input Service' before and after the amendment and found that construction services were indeed covered under the definition during the relevant period.3. Applicability of CBEC Board Circular No. 98/1/2008-ST:The appellant contended that the Commissioner wrongly relied on the CBEC Board Circular, which stated that construction services are neither subjected to Central Excise nor liable to service tax. The Tribunal noted that various benches had consistently held that construction activities for setting up a factory were covered under 'Input Service' before the 2011 amendment. The Tribunal cited several decisions, including those from the Punjab and Haryana High Court and other Tribunal benches, affirming the eligibility of construction services for cenvat credit during the relevant period.Conclusion:The Tribunal concluded that the issue was no longer res-integra and consistently decided in favor of the assessee. The impugned order was set aside, and the appeal was allowed with consequential relief as per law.(Pronounced on 29.11.2023)