By TIOL News Service

MUMBAI, MAY 18, 2018: A demand of CENVAT credit of over Rs.1.10 crores was confirmed by the CCE, Pune-I against the appellant along with imposition of penalty and interest. The period involved is from 01.04.2010 to 31.30.2012.

The facts are that the appellant is engaged in the manufacture of DG sets and also holder of service tax registration for providing taxable services viz. transport of goods by road, erection, commissioning and installation service and management, maintenance or repair services.

They had availed CENVAT credit of service tax paid on Installation and Commissioning services provided by various service providers (sub-contractors) at the site of installation of the DG sets.

Case of the department is that since the DG sets were cleared from the factory after payment of CE duty, the CENVAT credit availed on the services rendered at the site cannot be considered as Input Services. And, thus the demand notice came to be issued and confirmed against the appellant.

In appeal before the CESTAT, the appellant submits that identical issue in their own case was decided by the Tribunal, Ahmedabad in their favour - 2016-TIOL-401-CESTAT-AHM and, therefore, their appeal should be allowed.

The Bench reproduced the findings contained in the cited case and also from the decision in Koch-Glitsch India Ltd. - 2008-TIOL-2075-CESTAT-AHM and observed that the issue had been decided by the Division Bench in the appellant's favour and, therefore, following the same, the impugned order was set aside and the appeal was allowed with consequential relief.

Quick reference:

"6. The department has denied the CENVAT credit to the appellant on the basis of Rule 2 (1), sub-rule (ii) above. However, it is observed that the appellant is a service provider and is covered by Rule 2 (1)(i) which states, that "input services means any service used by the provider of taxable service for providing output service". In the instant case, it is undisputed that the appellant is a provider of taxable service and have provided the same. They are utilising the input service provided by sub-contractors, while providing their output service. Therefore, it is abundantly clear that they are eligible to take cenvat credit of the service tax paid on the input service provided by the sub-contractors. Therefore, we find that the appellant has rightly taken the cenvat credit on the input service provided by the sub-contractors and they have paid the applicable service tax on the output service provided by them. Therefore, we find that there is no contravention on the part of the appellant in this regard. Hence the impugned orders cannot sustain in law and therefore they are set-aside." - 2016-TIOL-401-CESTAT-AHM

Also see - 2014-TIOL-162-CESTAT-MUM .

(See 2018-TIOL-1557-CESTAT-MUM)