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2021 (10) TMI 383 - Central Excise
CENVAT Credit - input services - services availed for setting up of Coal Handling Plant - Coal Handing Plant (CHP) has been set up by the appellant for evacuation of coal from its mining premises - period from June 2013 to November 2015 - HELD THAT:- The purpose of setting up of the CHP is to load the coal into the railway wagons in an automated manner after the coal is crushed into the desired size. It is not in dispute that the services used by the appellant is for modernisation of the coal loading process. The definition of input service specifically include services received by a manufacturer for modernisation of a factory.
On perusal of decision of the Tribunal in the case of Pepsico India Holdings (P) Ltd [2021 (7) TMI 1094 - CESTAT HYDERABAD] relied upon by the appellant, the Tribunal has observed that without setting up of the factory, there cannot be any manufacture and the mere fact that the words ‘setting up of factory” has not been retained in the definition of input services post 01.04.2011, the same will not mean that the benefit of credit has been taken away by the legislature.
The services used for setting up of the factory even after 01.04.2011 would be eligible for credit. The Ld. Commissioner has allowed credit on certain invoices assuming the same to be pure services and disallowed the credit on remaining portion by considering the same to be in the nature of civil portion. We find that this Tribunal has been consistently applying the user test to decide the credit eligibility as laid down by the Hon’ble Supreme Court. The Tribunal in B S Sponge Pvt Ltd vs. CCE, Raipur [2019 (2) TMI 850 - CESTAT NEW DELHI].
Also, the mode of valuation adopted by the Contractor to discharge service tax on 40% of the contract value is in accordance with law contained in Service Tax Valuation Rules and cannot be disputed while deciding credit eligibility at the appellant’s end. When service tax has been levied only on 40% of the total value, it essentially means that service tax has been paid only on the service portion.
CENVAT Credit availed by the appellant for setting up of CHP, which is used for evacuation of coal by rapid loading process, cannot be legally denied - appeal allowed - decided in favor of appellant.