Appellant wins CENVAT credit on plantation services as service tax was paid without Revenue dispute

CESTAT Kolkata allowed the appeal regarding CENVAT credit on plantation services. The appellant was entitled to credit on service tax paid for services received, as the Revenue had accepted the service provider's tax payment without dispute. The Tribunal held that since service tax was paid by the appellant on services actually received, CENVAT credit was allowable. Citing precedent, the court ruled that credit on gardening services mandated by Pollution Control Board was permissible. The impugned order was set aside, finding no merits in the Revenue's case against the credit claim.

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Issues Involved:

1. Denial of Cenvat Credit on services availed by the appellant.
2. Denial of Cenvat Credit on plantation services.

Summary:

Issue 1: Denial of Cenvat Credit on services availed by the appellant

The appellant, engaged in the manufacture of excisable goods, expanded its manufacturing plant and availed various services such as works contract services, erection, commissioning and installation services, and construction of railway services. The service providers charged full value service tax without availing any abatement or exemption. The appellant availed Cenvat credit on the service tax paid. A show cause notice was issued alleging that the appellant wrongly availed Cenvat credit as the services were not liable to tax prior to 01.06.2007 and were not taxable under Construction Service or Commercial or Industrial Construction Services. The adjudicating authority raised a demand, along with interest and penalty, denying the Cenvat credit.

Upon review, it was found that the service tax paid by the service provider was accepted by the Revenue and not disputed at the service provider's end. Therefore, it cannot be disputed at the service recipient's end. The services received by the appellant were not disputed, and the appellant was entitled to Cenvat credit on the service tax paid. This Tribunal had previously held in the appellant's own case that the Cenvat credit was rightly availed. The Tribunal also referenced the case of Hindalco Industries Ltd. v. CCE, Kolkata-II, where it was held that services provided by ABMCPL to group companies qualify as 'Business Support Service' u/s 65(104c) of the Finance Act, 1994, and the appellant was entitled to avail Cenvat credit on such services.

Issue 2: Denial of Cenvat Credit on plantation services

The appellant also availed Cenvat credit on plantation services for the development of green cover around the Red Mud Pond area. The show cause notice denied the credit on the grounds that the plantation area was outside the plant premises and had no nexus with the manufacture of the final product. However, the Tribunal found that the plantation for a better environment in the factory premises has a direct or indirect nexus to the manufacturing activity. Therefore, the Cenvat credit on plantation services could not be denied.

The Tribunal cited the case of Commr. of C.Ex., Surat-II vs. Gujarat State Fertilizers & Chemicals Ltd., where it was held that the appellant is eligible to avail Cenvat credit on gardening services as mandated by the Pollution Control Board.

Conclusion:

The Tribunal held that the appellant correctly availed the Cenvat credit on both the services received and the plantation services. The impugned order was set aside, and the appeal was allowed with consequential relief.

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