The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Bangalore has remanded a case regarding CENVAT credit eligibility on construction-related input services claimed by Philips Carbon Black Ltd.
The appellant, Philips Carbon Black Ltd. had appealed against the order issued by the Commissioner of Central Excise, Cochin, which denied them CENVAT credit based on amendments to Rule 2(l) of the CENVAT Credit Rules, 2004.
The issue centres on whether the appellant is entitled to CENVAT credit on input services related to the construction of a co-generative power plant within their factory premises. The services in question were availed before April 1, 2011, when a key amendment to Rule 2(l) of the CENVAT Credit Rules (CCR), 2004, excluded civil construction services from the scope of input services eligible for CENVAT credit.
The appellant argued that the construction work for the power plant was completed by March 31, 2011, before the amendment took effect.
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It was also contended that services related to the setting up, modernisation and renovation of their factory, including those required for the construction of the power plant, were eligible under the pre-amendment definition of input services under Rule 2(l) of CCR, 2004. The appellant provided documentation supporting the completion date, including agreements, provisional energy bills and other relevant records.
The Commissioner of Central Excise, Cochin, however, ruled against the appellant, arguing that the company had improperly availed CENVAT credit on these input services. The Commissioner’s order emphasised that the amendment dated April 1, 2011, should apply to these services and consequently demanded a reversal of CENVAT credit along with penalties and interest.
The appellant, represented by Shri Kuriyan Thomas argued that the Commissioner’s order did not sufficiently consider critical documents proving the completion of construction activities before the amendment’s effective date.
The CESTAT noted that a thorough examination of the records was essential to ensure fair adjudication. The bench further pointed out that the Commissioner’s assessment did not adequately address the documentation submitted by the appellant.
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The respondent revenue, the Commissioner of Central Excise, represented by Shri Maneesh Akhoury raised concerns regarding the Point of Taxation Rules, 2011, arguing that invoices raised after April 1, 2011, should also be reviewed to assess whether they fall under the scope of the amended CENVAT Credit Rules.
In result, the two-member bench of the CESTAT comprising Dr. D.M. Misra (Judicial Member) and Mrs. R. Bhagya Devi (Technical Member) set aside the impugned order and remand the case to the adjudicating authority for a fresh examination.
The bench directed the authority to thoroughly review all relevant documents to determine whether the appellant’s civil construction work was completed before the amendment to Rule 2(l) of the CENVAT Credit Rules on 01.04.2011. The adjudicating authority is instructed to address all issues raised, including those related to the Point of Taxation Rules while observing principles of natural justice.
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