The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit of service tax allowable to the service of erection and commission of spray drying plant which falls under the category of input service under rule 2(l) of the CENVAT Credit Rules,2004.
Shivani Detergent Pvt. Ltd, the appellant assessee was manufacturing Sargam detergent cake, Sargam detergent powder, sulphuric acid spent sulphuric acid and also holding service tax registration to discharge service tax liability under the reverse charge mechanism and were availing the benefit of CENVAT credit on inputs, input services, and capital goods under CENVAT Credit Rules.
The assessee appealed against the order passed by the Commissioner (Appeals) for dis-allowing the CENVAT credit towards Erection and Commissioning services.
Ankur Upadhyay, the counsel for the assessee contended that the input service credit on the invoices for the erection of the plant and Detergent Spray Drying Plant was squarely covered under the provisions of Clause (ii) of rule 2 (l) of CENVAT Credit Rules since it had direct nexus with the manufacturing of detergent cake and powder.
Vishwa Jeet Saharan, the counsel for the department contended that the services of erection and commissioning of these plants fall under the exclusion clause of the definition of input service and the assessee was eligible to get the CENVAT credit.
The Bench observed that the exclusion clause does not apply to the service of erection and commissioning and hence it would fall under the main clause of input service since it is directly related to the manufacturing activity of the assessee.
A single-member bench comprising Binu Tamta (Judicial) quashed the order passed by the Commissioner (Appeals) while allowing the appeal filed by the assessee.
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