Allegation of Wrong Availement of Cenvat Credit on Ineligible Services: CESTAT remands back matter [Read Order]

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), remanded back matter in the case of allegation of wrong availement of cenvat credit on ineligible services.

On verification of the cenvat records of input services maintained by the appellant, M/s National Engineering Industries Ltd, it was found that they have wrongly availed cenvat on input services on various ineligible services like construction service, laptop insurance etc., as they did not fall under the definition of input service in view of the exclusion clauses (A) and (C) of Rule 2(l) of Cenvat Credit Rules, 2004.

Accordingly, show cause notice and corrigendum was issued to the appellant for recovery of the cenvat credit amounting to Rs. 37,91,504/- alongwith interest under Section 11AA of the Central Excise Act, 1944 and penalty under Rule 15 of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act.

The issue in the present appeal relates to the availment of cenvat credit on input services, which according to Revenue are ineligible in view of the exclusion clause in the definition of input service as defined under Rule 2(l) of the Cenvat Credit Rules, 2004.

Counsel for the appellant has submitted that the department and the authorities below have considered only the exclusion part of the definition of input service without appreciating the inclusive part as referred above in the definition, i.e. it includes services used in relation to modernisation, renovation or repairs of the factory premises or an office relating to such factory etc.

Authorised Representative had relied on the findings of the authorities below and submitted that the appellant had not submitted the requisite documents either before the Adjudicating Authority or the Appellate Authority.

A Single Member Bench of the Tribunal comprising Binu Tamta, Judicial Member observed that “, I find the authorities below have specifically noted that the assessee has not provided any contract/ work order/ agreement with the service provider to identify the work done on behalf of the appellant. The appellant has only annexed certain copies of the invoices, which were not figuring in the annexure to the demand notice and the other invoices were found attached with the appeal though such invoices of the service provider were part of the annexure enclosed to the demand.”

“Therefore, it would be proper to remand the matter back to the Adjudicating Authority, who may examine the case in the light of the documents which may be submitted by the parties and the definition of ‘input service’, which comprises of three components, namely, the means clause, the inclusion clause and the exclusion clause” the Tribunal concluded.

To Read the full text of the Order CLICK HERE

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