The Ahmedabad Bench of Customs, Excise and Service Taxes Appellate Tribunal (CESTAT) ruled that the construction services used for setting up of Effluent Treatment Plant are eligible for Cenvat credit.
Mr. Vivek Bapat, Counsel appearing on behalf of the appellant, Adroit Pharmachem Private Limited submitted that the construction service received by the appellant is for installation and erection of Effluent Treatment Plant which is nothing but covered under modernization of existing factory. Therefore, the service is covered in the inclusion clause of definition of ‘Input Service’ provided in Rule 2(l) of Cenvat Credit Rules, 2004.
On the other hand the Revenue contended that after April 1, 2011, construction service was excluded from the definition of ‘Input Service’ therefore, the appellant is not entitled for Cenvat credit.
The coram of Judicial Member, Ramesh Nair noted that the amended definition of ‘Input Service’ from 01.04.2011 was considered and it was viewed that though the construction service/ works contract service were excluded but it was interpreted that the said service related to only new construction or setting up of a new factory. But since modernization, renovation or repair and maintenance, even after exclusion category, continue to remain in the inclusion clause of definition, credit cannot be denied.
“I find that though construction service was excluded but since modernization, renovation and repair and maintenance still continue to exist in the inclusion clause of definition, credit shall be allowed,” the CESTAT added.
“Moreover, the show cause notice has not made any charge related to the exclusion category of ‘Input Service’, it only deals with the main clause and inclusion clause of definition. Therefore, the adjudication order deciding the matter on the basis of exclusion category is beyond the scope of show cause notice,” the CESTAT while setting aside the impugned order said.
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