CENVAT Credit available on Construction/Works Contract Service for Re-carpeting of Road in Industrial Estate: CESTAT [Read Order]

The Ahmedabad bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that CENVAT Credit is allowable on construction/works contract service for the re-carpeting of roads in the industrial estate.

The appellant, Bombay Market Art Silk Co-Op (Shops & Warehouse) Society Limited has applied for Cenvat credit in respect of Construction/ Works Contract Service for re-carpeting of the road in their industrial estate. The lower authorities denied Cenvat credit on the ground that it is new construction of a road under works contract service which is excluded in the definition of Input Service under Rule 2(l) of Cenvat Credit Rules, 2004.

Mr. Ramesh Nair, Member (Judicial) observed that the fact is not under dispute that the industrial estate already existed, and for moving around the Industrial Estate the tar roads were also existing.

“The works contract/ construction was executed for the purpose of re-carpeting of the existing road. Therefore, the said services are for the purpose of repair and renovation of the existing industrial estate. I have also observed from the notes of the Board meeting for the purpose of re-carpeting the road that it is for re-carpeting and not for new construction of the road. Therefore, this service is for repair and renovation and not for originating the new construction,” the Tribunal observed.

Based on the judicial decisions, the Tribunal held that “any construction and works contract is used for repair and renovation of the existing factory, the same falls under inclusion clause of the definition of Input Service, accordingly, the Cenvat credit is admissible. The impugned order is set aside and the appeal is allowed.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.