Jai Balaji Industries Ltd. Vs Commissioner of Central Excise (CESTAT Kolkata)
Held that services relating to modernization, renovation or repairs of factory is input service, accordingly cenvat credit available.
Facts- The appellant is engaged in the manufacture of Iron and Steel products as well as articles of Iron and Steel. As part of their modernization/renovation project, the appellants decided to set up a Coke Oven Plant in their factory premises for which the Appellants gave contracts to a number of service providers. The contractors paid service tax on the services provided by them. The Appellants took credit of the service tax so paid, as tax paid on ‘input service’.
The department took the view that the services provided by the contractors were in the nature of ‘works contract services’ which, was excluded from the definition of ‘input service’ under the Cenvat Credit Rules, 2004. Accordingly, show cause notice demanding ineligible Cenvat credit of Rs. 1,93,93,204/-, along with interest and an equal amount of penalty were issued to the appellant. Being aggrieved, the appellant preferred the present appeal.
Conclusion- Held that the expression ‘modernization, renovation or repairs of a factory’ was appearing in the definition of ‘input service’ both before and after 01.07.2012. It has not been denied by the department that the Coke Oven Project of the appellants was towards modernization and renovation of their existing plant/factory.
In the case of M/s. Reliance Industries vs CCE &ST, Rajkot is was held that service relating to modernization, renovation of the existing factory is admissible as input service.
FULL TEXT OF THE CESTAT KOLKATA ORDER
1. This is an appeal against Order-in Original No 101-103/COMMR/DGP/2015-16 dated 10-03-2016, passed by the Commissioner of Central Excise, Service Tax and Customs, Durgapur.
2. The brief facts of the case are that M/s. Jai Balaji Industries Limited (Unit-IV) located in Durgapur, West Bengal (hereinafter referred to as the Appellants) were, during the relevant period, duly registered with Central Excise and engaged in the manufacture of Iron and Steel products as well as articles of Iron and Steel classfiable under chapters 72 and 73, respectively, of the Central Excise Tariff. As part of their modernization/renovation project the Appellants decided to set up a Coke Oven Plant in their factory premises for which the Appellants gave contracts to a number of service providers.
3. The contractors paid service tax on the services provided by them. The Appellants took credit of the service tax so paid, as tax paid on „input service‟.
4. The department took the view that the services provided by the contractors were in the nature of „works contract services‟ which, was excluded from the definition of „input service‟ under the Cenvat Credit Rules, 2004. Accordingly, the following three show cause notices were issued demanding total ineligible Cenvat credit of Rs. 1,93,93,204/-, along with interest and equal amount of penalty :
