2024 (4) TMI 468 - AT - Central Excise

Tribunal Rules Cenvat Credit Valid for Non-Permanent Structures, Overturns Prior Order, Sets Precedent for Service Providers.

Uni Ads Ltd Versus Commissioner of Central Tax, Hyderabad

The Tribunal allowed the appeal, overturning the impugned order, and confirmed the appellant's entitlement to Cenvat credit on materials used for erecting ... CENVAT Credit - inputs or not - MS angles, shapes, sections and channels etc., used for erection of “Unipoles”/hoardings which are fixed to the earth and on which the appellant/assessee displays advertisement - HELD THAT:- The issue herein is squarely covered by the precedent order in appellant’s own case of this Tribunal in M/S UNI ADS LTD VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX, HYDERABAD – II (VICE-VERSA) [2019 (8) TMI 70 - CESTAT HYDERABAD], wherein similar dispute has been held in favour of the appellant and against the Revenue. It is further found that the exclusion clause in Explanation (2) of Rule 2(k) of CCR was introduced w.e.f. 07.07.2009, vide Notification No. 16/2009- CE. From plain reading of the exclusion clause, it is evident that exclusion is applicable in case of a manufacturer having a factory and such exclusion is not applicable in the case of the appellant who is a provider of output services. The impugned order is set aside - appeal allowed. Issues involved: The issue involves whether the appellant, providing advertisement services, is entitled to Cenvat credit on materials like MS angles, shapes, sections, and channels used for erection of 'Unipoles'/hoardings fixed to the earth for displaying advertisements.Details of the Judgment:1. Issue of Cenvat Credit Eligibility:The department argued that the appellant is not entitled to Cenvat credit on the materials as they are fixed to the earth and cease to be goods, hence not qualifying as inputs or capital goods. The appellant contended that they are eligible for credit as the materials are not permanently attached to the earth and qualify as goods. Reference was made to the Supreme Court's judgment in Solid & Correct Engineering Works to support their claim.2. Precedent and Legal Clarifications:The appellant cited the judgment of the Hon'ble Supreme Court and decisions of various High Courts to support their claim that materials like steel bars and cement used in construction of capital goods for rendering services are eligible for Cenvat credit. They argued that the goods in question are not attached to the earth permanently and should qualify for credit.3. Interpretation of Exclusion Clause:The Tribunal referred to a precedent order in the appellant's own case where a similar dispute was decided in favor of the appellant. It was noted that the exclusion clause introduced in Rule 2(k) of CCR from 07.07.2009 does not apply to service providers like the appellant, but to manufacturers with factories.Conclusion:After considering the arguments and precedents, the Tribunal allowed the appeal, setting aside the impugned order. The appellant was deemed entitled to consequential benefits as per the law.This judgment clarifies the eligibility of service providers for Cenvat credit on materials used for structures like hoardings fixed to the earth, based on the interpretation of relevant legal provisions and precedents.