By TIOL News Service

MUMBAI, APR 23, 2014: THE appellant is a manufacturer of excisable goods and had availed construction service for construction of factory building, installation of plant and machinery etc. during the period February, 2010 to December,2010.

The bills have been raised by the contractor and service provider during the period June to Dec, 2010 and the last payment for the bills, which are about 11 in number, were made on 21.1.2011.

The Service Tax paid by the service provider has been taken as CENVAT credit by the appellant. The appellant took credit of the tax paid on the said services on 28.4.2011.

The jurisdictional authorities were of the view that the credit so availed is inadmissible in view of the amendment to rule 2(l) of the CCR, 2004 w.e.f 01.04.2011 whereby the definition of Input Service was substituted to "exclude services such as construction service defined under Section 65 (zzq) of the Finance Act, 1994".

The credit availed by the appellant was denied by the adjudicating authority and the Commissioner(A) upheld this order.

Before the CESTAT the appellant justified their claim of CENVAT by referring to the following clarification issued by the CBEC under Circular 943/04/2011-CX dated 29.4.2011& which reads -

The Revenue representative supported the order of the lower authorities.

The Bench observed -

"4. Having considered the rival submissions, I find that in view of the clarifications issued by the aforementioned Circular and in view of the fact that services had been rendered and billed prior to 1.4.2011 for which payment has also been paid prior to 1.4.2011. Such input service tax credit is allowable and otherwise also as clarified vide the above mentioned Circular. It is also held that the construction activity in the present case supports manufacture both directly and indirectly…."

In fine, the appeal was allowed with consequential relief& the Stay application was also disposed of.

In passing : If the lower authorities are unhappy following the Board Circular which is directly on the subject, they should not be venting their frustration on the assessee by denying him the credit but try something else!

(See 2014-TIOL-620-CESTAT-MUM)