KCP Ltd. Vs Commissioner of Central Tax Guntur (CESTAT Hyderabad)
The appeal concerns the eligibility of Cenvat Credit on input services used for setting up a cement manufacturing unit and whether such credit can be denied when invoices, payments, and credit availment occur after a statutory amendment, even though the services were rendered prior to the amendment date. The appellant, engaged in manufacturing cement and clinker, established a new production unit in Andhra Pradesh and awarded contracts for civil construction, engineering, fabrication, and erection works. The construction was completed and commercial production commenced in March 2011. However, certain invoices for services rendered prior to 31.03.2011 were raised later due to reconciliation of accounts, and the appellant availed Cenvat Credit during April 2011 to February 2012 under Rule 4(7) of the Cenvat Credit Rules, 2004.
The adjudicating authority denied credit amounting to Rs. 56,40,148 on the ground that there was insufficient documentary evidence to prove that the services were completed before 01.04.2011. It was further held that, following Notification No. 3/2011-CE(NT) effective from 01.04.2011, services relating to works contract were excluded from the definition of input services, and therefore ceased to be eligible for credit.
The appellant contended that the services had indeed been completed prior to 01.04.2011 and relied on Circular No. 943/04/2011-CX dated 29.04.2011, which clarified that credit would be admissible if services were provided before the amendment date, even if invoices or payments were made later. The appellant also pointed to the commencement of production in March 2011 and ER-1 returns as evidence of completion of services, along with confirmation from contractors and prior intimation to the department.
