Case Law Details

Case Name : M/s. Navin Fluorine International Ltd. Vs. CCE (CESTAT Delhi)
Appeal Number : Excise Appeal No. 50344/2018 (SM)
Date of Judgement/Order : 19/03/2018
Related Assessment Year :
Courts : All CESTAT (725) CESTAT Delhi (258)

M/s. Navin Fluorine International Ltd. Vs. CCE (CESTAT Delhi)

It is clear that show cause proceedings were initiated only on the ground that the amended Cenvat Credit Rules excluded the construction services as eligible input service. The appellant took credit on 30.04.2011 whereas the amendment was carried on 1.4.2011. It is nobody’s case that the construction activity was carried out only after the exclusion made in the Rules. Admittedly, the construction services commenced and were provided much before even the amendment was introduced on 1.4.2011 if at all, a small portion of service could have been rendered after 1.4.2011. Against such proposition also, the appellant had produced substantial evidence in the form of invoice raised by the provider, which was dated 25.03.2011, the payment made for such invoice by the appellant on 28.03.2011 and the certification by Architect dated 26.03.2011. Regarding discrepancy in the amount between the purchase order and the invoice dated 25.03.2011, the appellants clarified that the invoice based on the running bill of civil work, certain further work and bill was not covered for credit in the present proceedings.

In view of the above factual analysis, I note that the amendment carried out w.e.f. 1.4.2011, as no implication in the present case, as the services have been availed and paid for prior to the said date. The credit was availed on 30.04.2011 by itself cannot be the reason for denial. This much has been clarified by the Board also vide their circular dated 29.04.2011.

FULL TEXT OF THE CESTAT ORDER IS AS FOLLOWS:-

The dispute in the present appeal relates to eligibility of the appellant for cenvat credit on “construction service”. The appellant engaged M/s. United Project Construction Ltd. in contract to do civil construction works for Pilot Plant Building. The dispute in the present case relates to an amount of Rs. 43,28,107/- of service tax availed as credit on such construction services by an entry dated 30.04.2011 on the invoice dated 29.03.2011 raised by provider of service. The Revenue proceeded against the appellant on the ground that construction service was specifically excluded from the eligible input service w.e.f. 1.4.2011 by an amendment. As such, the credit availed by the appellant on 30.04.2011 is not permissible. Relying on the Board’s Circular dated 29.04.2011, the Revenue held a view that as the provisions of service was not completed prior to 1.4.2011, the credit cannot be allowed.

2. Ld. Counsel appearing for the appeal submitted on the following lines:-

(a) The appellant first placed an intend dated 21.05.2010 on the construction company. The work of construction commenced on 25.5.2010. The said construction activity was completed before 4.2011. An invoice for the consideration along with a tax was raised on 25.03.2011. The appellant made payment to the service provider on 28.03.2011. As such, the construction service was raised by the appellant prior to 1.4.2011.

(b) The Revenue did not contest the final aspect of the above dates. The Commissioner (Appeals) raised certain doubts regarding the date of purchase order, commencement of work, etc. Regarding genuineness of the purchase order, which was submitted during the personal hearing before the Commissioner (Appeals), ld. Counsel submitted that the purchase order was retrieved from the system, which was already upgraded to GST. Apparently, the purchase order had mentioned about the GST Registration etc. Referring to the purchase order with older registration etc, with a same date, it is submitted that retrieval of purchase order with new GST number by itself cannot be the reason for denying the order itself.

(c) The construction services are normally rendered over a period of time. It cannot be the case of the Revenue that the whole construction service commenced after 1.4.2011 and completed before 30.04.2011 when the appellant availed the credit.

(d) Reliance was placed on the Board’s Circular dated 29.04.2011 and also certain case laws in support of the submissions of the appellant.

3. Ld.AR submitted that the construction service was excluded from the eligibility for the credit purpose w.e.f. 1.4.2011. Reiterating the findings recorded by the ld. Commissioner (Appeals), ld. AR submitted that after 1.4.2011, the appellant is not entitled for the credit. The appellant failed to substantiate that the services were provided and availed prior to 1.4.2011.

4. I have heard both the sides and perused the appeal record.

5. It is clear that show cause proceedings were initiated only on the ground that the amended Cenvat Credit Rules excluded the construction services as eligible input service. The appellant took credit on 30.04.2011 whereas the amendment was carried on 1.4.2011. It is nobody’s case that the construction activity was carried out only after the exclusion made in the Rules. Admittedly, the construction services commenced and were provided much before even the amendment was introduced on 1.4.2011 if at all, a small portion of service could have been rendered after 1.4.2011. Against such proposition also, the appellant had produced substantial evidence in the form of invoice raised by the provider, which was dated 25.03.2011, the payment made for such invoice by the appellant on 28.03.2011 and the certification by Architect dated 26.03.2011. Regarding discrepancy in the amount between the purchase order and the invoice dated 25.03.2011, the appellants clarified that the invoice based on the running bill of civil work, certain further work and bill was not covered for credit in the present proceedings.

6. In view of the above factual analysis, I note that the amendment carried out w.e.f. 1.4.2011, as no implication in the present case, as the services have been availed and paid for prior to the said date. The credit was availed on 30.04.2011 by itself cannot be the reason for denial. This much has been clarified by the Board also vide their circular dated 29.04.2011. Reliance can also be placed on the decision of the Tribunal in Ismt Ltd. – 2015 (37) STR 148 (Tribunal-Mumbai).

7. In view of the above discussion and analysis, I find that the impugned order is not sustainable. Accordingly, the same is set aside. The Appeal is allowed.

[order dictated & pronounced in open court]

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