By TIOL News Service

MUMBAI, AUG 01, 2017: THE appellant availed CENVAT credit in respect of "paver blocks" used for repair of road in the factory yard by claiming the same were inputs.

Both the lower authorities denied the credit and, therefore, the matter is before the CESTAT.

None appeared on behalf of the appellant or sought adjournment.

The AR, while reiterating the findings of the order, submitted that the paver blocks were used for repair of roads which is not in relation to the manufacturing activity of the appellants; that it does not fall under the definition of ‘input' as provided u/r 2(k) of CCR, 2004. Moreover, as per the amendment made by notification 16/2009-CE in the definition of input,as per explanation 2, goods used for construction of shed, or laying of foundation or making of structure for support of capital goods are excluded from the definition; paver blocks used for repair of roads also fall under the same category i.e. construction of roads.

The Bench observed -

"4. … From the submission of the appellants made in grounds of appeal, they claimed that without proper factory roads, activity of manufacture of goods cannot take place. The factory roads are basic necessity which has a direct bearing on the manufacturing activity. They submit that explanation 2 does not apply in their case as the paver blocks were used for repair and maintenance of the factory road and not for construction of factory shed or laying of foundation. I find that the paver blocks were used for repair of roads. The appellant have taken credit of such paver blocks considering it as input. The definition of "input" prevailing at the relevant time reads as follows:- x x x

5. From the definition it can be seen that only those goods can be treated as inputs which are used directly or indirectly in relation to manufacture of final product. In this case the paver blocks cannot be said to have been used in or in relation to the manufacture of final product even it is not contributing in relation to the plant and machinery in the performance of manufacture of final product. I also observed from the explanation 2 of the definition of input wherein all the goods used for construction of factory shed or laying of foundation have been excluded. The road of the factory premises is similar to the construction activity; accordingly, it falls under the exclusion category. I am therefore of the view that the paver blocks is not qualified as the input as per the definition provided under Clause (k) of Rule 2 of the Cenvat Credit Rules, 2004…. "

The impugned order was upheld and the appeal was dismissed.

In passing: Incidentally, Renting of road is an Input Service - Hiedelberg Cement India Ltd. - 2017-TIOL-2499-CESTAT-MUM .

(See 2017-TIOL-2711-CESTAT-MUM)