Cenvat credit on services used for repair of factory/office relating to such factory

[Kadayam Ganapathy Subramanian]

Dear Sirs,

The definition of 'input service' includes services used in relation to modernization, renovation or repair of factory or office relating to such factory. But the said definition of 'input service' excludes service portion of works contract and construction service including service listed under Clause (b) of Section 66E of the Finance Act, 1994 used for construction or execution of works contract of a building or a civil structure or a part thereof or laying of foundation or making of structures for support of capital goods. 

Our question is whether the construction/works contract service used for modernization, renovation or repair of factory or office relating to such factory is eligible for credit in view of the above inclusive definition and further the definition of construction as specified in Explanation (II) of Section 66E (b) does not include modernization, renovation or repair of any existing civil structure.

Kindly enlighten your views by interpreting the above provisions.

Regards,

K.G Subramanian

e.mail ID: subramaniankg at the rate of microlabs.in

AI Summary

Cenvat credit on construction services: allowed for repair/renovation, excluded where works create or support capital assets.
Cenvat credit is generally allowable for service tax paid on construction or works contract services when those services are used for modernization, renovation or repair of a factory or an office relating to such factory; credit is expressly disallowed where such services are used for construction/execution of buildings or civil structures, laying foundations, making or modifying structures for support of capital goods, or for additions, alterations, replacements or remodeling that amount to capitalized works as excluded by the definition of construction.