Relief to Reliance Industries: CESTAT allows CENVAT Credit on ECIS for Modernization & Renovation or Repair of Existing Factory [Read Order]

In a major relief to Reliance Industries, the CESTAT, Ahmedabad bench has held that CENVAT Credit is allowable on ECIS for the modernization and renovation or repair of the existing factory.

The appellant is engaged in the manufacture of petroleum product and petrol chemicals which are cleared on the payment of appropriate duty of excise. The department held that the services availed were construction services or service portion in the execution of WCS which were used for construction of a building or civil structure or a part thereof and/or making structure for support to capital goods, and that these services were covered by the exclusion clause in the definition of “input service.”

Relying on a catena of decision, the Tribunal comprising Member (Judicial), Mr. Ramesh Nair Hon'ble Member (Technical), Mr. Raju observed that the classification of service cannot be disturbed or challenged at the end of service recipient particularly for denial of cenvat credit. Once the classification is finalized at the service provider end, the same cannot be altered at the service recipient end.

“Any service of any nature if it is used for modernization and renovation or repair of the existing factory are indeed input services in terms of Rule 2(l) of Cenvat Credit Rules, 2004. On this ground also the appellant are entitled for Cenvat Credit in respect of ECIS which were used in relation to modernization and renovation of the existing factory,” the Tribunal said.

Noting the fact that the appellant is not a provider of service of construction of a building or a civil structure nor maker of structure for support of capital goods, the Tribunal held that “The appellant is a manufacturer of various excisable goods; the credit taken on ECIS is attributed to the manufacture of excisable goods considering the status of the appellant. In our alternate view the exclusion is applicable to the service provider of construction of a building or a civil structure or maker of structure for support of capital good. In the facts of the present case the appellant being the manufacturer of excisable goods availed the credit on ECIS. In these circumstances the exclusion clause is not applicable to the appellant. For this reason also the denial of credit on ECIS is not sustainable.”

To Read the full text of the Order CLICK HERE

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