Repair and Maintenance of Plant & Machinery not included in Input Service under Rule 2(1) of CENVAT Credit Rules: CESTAT upholds Service Tax Demand [Read Order]

The Chandigarh bench of Customs Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the repair and maintenance of plant and machinery is not included in the definition of Input service under rule 2(1) of Central Value Added Tax (CENVAT) Credit Rules, 2004. Thus, confirmed the demand to pay service tax.

The panel of S.S. Garg observed that the appellant is not entitled to avail Cenvat credit on the services received from Engineering Work companies because the said the service is excluded from the definition of input service as provided under Rule 2 (l) of Cenvat Credit Rules, 2004

The appellant, Chemix Oil Private Limited, registered with the service tax department and was engaged in providing job work to M/s. Hindustan Unilever Ltd., Baddi and was paying service tax on the job charges received from M/s.HUL, Baddi.

The appellant’s premises was visited by the audit party and during the audit certain discrepancies were noted by the audit team and show cause notice was issued.

The adjudicating authority upheld the demand of service tax as well as credit allegedly wrongly availed by the appellant.

The counsel of the appellant submitted that the impugned order is not sustainable in law as the same has been passed without proper appreciation of facts and precedent decision on the same issue.

It was submitted that the appellant received services from Chhatrapati Engineering and Sai Engineering works with regard to repair and maintenance of plant and machinery. 

However, the audit staff wrongly presumed that the said activity was used for building structure and therefore the same is excluded from the definition of input service and the credit was not admissible.

Additionally asserted that the appellant has availed services on account of repair and maintenance of plant and machinery and the Revenue without basis has held the same services as construction of building structure.

The bench stood with the department that the said activity was used for building structure whereas the stand of the appellant is that these services were availed with regard to repair and maintenance of plant and machinery. Thus ruled that appellant is not entitled to CENVAT credit on the services.

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