Upgrading Existing Plants is Input Services under CCR, Cenvat Credit allowable: CESTAT [Read Order]

The Ahmedabad bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that upgrading existing plants can be considered Input Services under Cenvat Credit Rules, 2004 (CCR) and allowed appeal by General Motors Pvt Ltd (the Appellant) against order by the Adjudicating Authority confirming the order issued by The Commissioner of Central Excise (CCE), Vadodara (the Respondent)

General Motors claimed Cenvat Credit on construction and restoration services for upgradation of factory and for the insurance of staff and directors but the Adjudicating Authority denied the Cenvat Credit on construction service as per the decision in the case of Vandana Global, decided by a bigger bench of this tribunal and as per the amendment Rule 2k with effect from 08.07.2009.

The Adjudicating Authority had also taken into account the amendment made with effect from 01.04.2011 wherein the setting of factory was deleted from the definition of Input Services. Regarding the insurance service for staff/directors the adjudicating authority contended this service was used for welfare and health of staff and directors and the same was nowhere being utilized in manufacturing process, directly or indirectly.

Priyanka Rath appeared on behalf of the company and submitted that it was evident from the record that construction service received by the company was in respect of expansion, modernization, modification of the existing plant which was not excluded in the definition of Input service under Rule 2(l).

She further submitted that the issue regarding insurance service could only be raised for the period after 01.04.2011, when the service for personal use had been excluded from the definition of Input service and they had reversed the credit for the period post on 01.04.2011.

P Ganesan, Superintendent (AR) appeared on behalf of the revenue reiterates the finding of the impugned order.

The two member bench consisting of Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) after hearing both sides supported the submissions made on behalf of the company and held that, “From the definition of input service under Rule 2(l) before and after 01.04.2011, the services in relation to modernization, renovation and repairs of factory premises was clearly covered under the inclusion part of the definition” and allowed the Cenvat Credit claim regarding construction services.

The bench further held that, “The credit on insurance for staff/ directors is admissible input service. However, the appellant have admittedly reversed the Cenvat credit in respect of insurance service for the period post 01.04.2011. Accordingly, the demand of Cenvat credit on insurance service which was reversed by the appellant is maintained, without expressing any view on merit which was reversed by the appellant is maintained, without expressing any view on merit.” And the appeal was allowed.

To Read the full text of the Order CLICK HERE

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