Case Law Details
Reliance Industries Ltd. Vs C.C.E. & S.T. (CESTAT Ahmedabad)
In the present case the appellant’s cenvat credit was denied in respect of input services viz. ECIS. The credit on ECIS was denied on the ground that this service is falling under the exclusion clause in the definition of input service under Rule 2 (l) of Cenvat credit rules, 2004.
The brief facts of the case are that the appellant are engaged in the manufacture of petroleum product and petrol chemicals which are cleared on the payment of appropriate duty of excise. In the year 2015 the appellant undertook modernization/ expansion of its manufacturing facilities in their Jamnagar refinery by setting of facilities such as Coke Gasification Island, Air Separation Unit (ASU), CoRecovery Unit , Sulphur Recovery Unit (SRU),Refinery Off-Gas Cracker Plant (ROGC),Low Density Polyethylene Plant (LDPE), Linear Low Density Polythylene Plant (LLDPE), the Captive Power Plant etc. This project was nomenclated by the appellant as the J3 project. The erection, commission, installation service and works contract service in dispute were rendered under 81 contracts by 41 contractors/ service providers. The Appellant have not availed any credit in respect of services used for laying of foundation or for making of structures for support of capital goods. The only credit on Fabrication of structures that has been availed by them in respect of pipes supports to the tune of Rs 33,60,790/- as the said pipe supports are themselves regarded as capital goods as per the definition of “ Capital Goods” under rule 2(a) of Cenvat Credit Rules, 2004, being pipes or tubes fittings. Likewise, the appellant has also not availed any credit on Construction service or Works contract service in so far as they are used for construction or execution of works contract of building or a civil structure or of a part thereof. The contracts for laying of foundation or making of structures for support of capital goods were separately placed or were separate line items/ deliverables in the contracts, in respect of which credit to the tune of Rs 275,05,12,910/- has not been availed in respect of the J3 Project. The contracts for installation of machinery as also technological/ industrial structures such as handrails, ladders , staircases, platforms etc entered into by the appellant were pure service / labour work orders/ contracts wherein all the material required was made available by the appellant to the service provider as free issue. The aforesaid services were provided by the service provider under the head of mainly in respect of ECIS and in few case under WCS. On these services the appellant had availed the Cenvat credit. Based on audit conducted by the department the appellant was issued a Show cause notice dated 07.06.2019 alleging that the Cenvat credit availed by the appellant in respect of services of ECIS and WCS (relating to installation and commissioning) received by it, for the four categories of work, enumerated below was inadmissible. According to the Notice, the services availed were construction services or service portion in the execution of WCS which were used for construction of a building or civil structure or a part thereof and/or making structure for support to capital goods, and that these services were covered by the exclusion clause in the definition of “input service” .
CESTAT held that any service of any nature if it is used for modernization and renovation or repair of the existing factory are indeed input services in terms of Rule 2(l) of Cenvat Credit Rules, 2004. On this ground also the appellant are entitled for Cenvat Credit in respect of ECIS which were used in relation to modernization and renovation of the existing factory.
Without prejudice, We are also of the opinion that the appellant is not a provider of service of construction of a building or a civil structure nor maker of structure for support of capital goods. The appellant is a manufacturer of various excisable goods; the credit taken on ECIS is attributed to the manufacture of excisable goods considering the status of the appellant. In our alternate view the exclusion is applicable to the service provider of construction of a building or a civil structure or maker of structure for support of capital good. In the facts of the present case the appellant being the manufacturer of excisable goods availed the credit on ECIS. In these circumstances the exclusion clause is not applicable to the appellant. For this reason also the denial of credit on ECIS is not sustainable.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
