Polychem Industries Vs Commissioner of Central Excise And Service Tax-CGST (CESTAT Ahmedabad)
The CESTAT Ahmedabad allowed the appeal filed by Polychem Industries and set aside the order denying CENVAT credit of Rs. 32,84,099/- along with an equivalent penalty. The dispute concerned Service Tax credit availed from January 2017 to June 2017 and transferred through TRAN-1 returns on services used for setting up the factory, including fabrication, pipeline erection, welding, cutting, flange fixing and other related services before commencement of commercial production. The department considered these services outside the definition of “input service” under Rule 2(l) of the Cenvat Credit Rules, 2004, particularly after the words “setting up” and “activities relating to business” were removed from the inclusive portion with effect from 01.04.2011.
A Show Cause Notice dated 08.01.2022 resulted in an Order-in-Original dated 27.12.2022 confirming recovery of Rs. 32,84,099/- with interest under Rule 14 and imposing an equivalent penalty. The Commissioner (Appeals), by order dated 14.06.2023, upheld the demand and penalty, leading to the present appeal.
The appellant submitted that the disputed services fell within the main part of Rule 2(l), notwithstanding removal of “setting up” from the inclusive portion. Reliance was placed on decisions including M/s. Vimal Infrastructure India Pvt Ltd, Pepsico India Holdings Pvt Ltd, Tata Steel Limited, NU-Vista Limited and Jamshedpur Continuous Annealing and Processing Company Pvt Ltd. The appellant also contended that the extended limitation period was unavailable because there was no suppression or wilful misstatement.
