Custom, Excise & Service Tax Tribunal
Godawari Power & Ispat Limited vs Commissioner, Customs, Central Excise ... on 8 November, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH
EXCISE APPEAL NO. 51211 OF 2020
(Arising out of Order-in-Appeal No. RPR-EXCUS-000-APP-048-19-20 dated 26.08.2020
passed by the Commissioner (Appeal), Customs, Central Excise & Service Tax, Raipur)
M/s. Godawari Power & Ispat Limited ...Appellant
Plot No. 428/2, Phase-I,
Industrial Area, Siltara,
Raipur (CG)-493111
Versus
Commissioner, Raipur ...Respondent
Customs, Central Excise & Service Tax
Central Excise Building, Tikrapara
Raipur (CG)-492001
APPEARANCE:
Shri Krishnamohan K. Menon and Ms. Parul Sachdeva, Advocates for the
appellant.
Shri Rakesh Agarwal, Authorized Representative for the Respondent
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL)
Date of Hearing: 25.05.2023
Date of Decision: 08.11.2023
FINAL ORDER NO. 51519/2023
JUSTICE DILIP GUPTA:
M/s. Godawari Power & Ispat Limited1 has filed this appeal for
setting aside the order dated 26.08.2020 passed by the Commissioner,
Customs, Central Excise & Service Tax (Appeals), Raipur2. The appeal
had been filed by the department before the Commissioner (Appeals)
against that part of the order dated 25.03.2019 passed by the
Additional Commissioner that allowed CENVAT credit of Rs. 63,29,533/-
1. the appellant
2. the Commissioner (Appeals)
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to the appellant in respect of the show cause notice dated 26.04.2016
and also allowed CENVAT credit of Rs. 75,366/- to the appellant in
respect of the show cause notice dated 09.01.2017. It needs to be
noted that by the aforesaid order dated 25.03.2019, the Additional
Commissioner had also disallowed CENVAT credit of Rs. 13,94,172/- in
respect of the show cause notice dated 26.04.2016 and CENVAT credit
of Rs. 5,79,787/- in respect of the show cause notice dated 09.01.2017.
The Commissioner (Appeals) has allowed the appeal filed by the
department and has set aside the order passed by the Additional
Commissioner allowing CENVAT credit to the appellant with a direction
for recovery of Rs. 64,04,899/- with interest and penalty.
2. The appellant is a holder of Central Excise Registration and is
engaged in the manufacture of various iron and steel products, such as
Sponge Iron, M.S Ingots, H.B Wire. The appellant claims that it has
been paying duty regularly and filing the returns.
3. The present dispute relates to input service credit availed by the
appellant on the services availed by the appellant with respect to
renovation, repairs and modernizations of its plant and machinery. The
case of the department is that the said services relate to industrial and
commercial construction services/work contract services pertaining to
civil works and would not be „input services‟ as defined under rule 2(1)
of the CENVAT Credit Rules, 20043.
4. Various audit objections had been raised to which the appellant
pointed out how the credit did not pertain to civil work but was in
relation to renovations/repairs of the plant and machinery. The
appellant also segregated and reversed the service tax credit
3. the CENVAT Rules
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apportionable to civil work to the extent of Rs. 9,95,156/- on
23.06.2014 with interest of Rs. 3,03,786/-.
5. However, two show cause notices were issued to the appellant
proposing denial of input service credit on the premise that the service
that was rendered by the appellant was in connection with civil work
and the details are as follows:
S. Show cause notice Period involved CENVAT credit
No. date (Rs.)
1. 26.04.2016 01.04.2011 Rs. 77,23,705/-
to
30.11.2015
2. 09.01.2017 Dec 2015 Rs. 6,55,153/-
to
Aug 2016
Total Rs. 83,78,858/-
6. The appellant contested the show cause notices, but the entire
demand of Rs. 83,78,858/- was confirmed with interest and penalties
by an order dated 28.02.2018. The appellant filed an appeal before the
Commissioner (Appeals). The aforesaid order was set aside and the
matter was remanded for fresh adjudication by order dated 17.08.2018.
7. The appellant, on remand, supplemented the earlier submissions
and submitted work-wise-invoice-wise chart duly certified by a
Chartered Engineer. Specific details of input services, credit reversals
were also provided. The appellant also demonstrated how the input
services were not civil works, but were used for
renovation/repair/modernization of the plant and machinery.
8. The adjudicating authority examined the input service
transactions covered by the two show cause notices and dropped a
substantial portion of the demand, while confirming a smaller portion by
order dated 25.03.2019. The details of the demand dropped or
confirmed are as follows:
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Common Show Period Demand Demand Demand Penalty
order date cause proposed dropped confirmed confirmed
notice (in Rs.) (in Rs.) (in Rs.) (in Rs.)
date
26.04.2016 01.04.2011 77,23,705/- 63,29,533/- 13,94,172/- 6,97,086/-
to with interest under rule
30.11.2015 15(2) read with
section
11AC(1)(c)
25.03.2019
09.01.2017 Dec 2015 6,55,153/- 75,366/- 5,79,787/- 57,978/- under
to rule 15(1) read
Aug 2016 with section
11AC(1)(a)
Total 83,78,858/- 64,04,899/- 19,73,959/-
9. The department filed an appeal against that part of the order that
dropped the demand and the Commissioner (Appeals) confirmed the
demand of Rs. 64,04,899/- with interest and penalty.
10. Shri Krishnamohan K. Menon, learned counsel assisted by Ms.
Parul Sachdeva, appearing for the appellant made the following
submissions:
(i) The adjudicating authority had examined each
transaction and document to identify the exact scope
of the transaction and the use of the input service to
separate what was permissible and what was not.
The invoices, work orders and Chartered Engineers
Certificates were examined before permitting a
substantial portion of the credit and denying the
remainder. The Commissioner (Appeals) made a
blanket reversal in two paragraphs without giving
any substantial reason, but merely reiterating that
everything was civil work. In this connection,
reliance has been placed on the following decisions of
the Tribunal:
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(a) Salora International vs. Commissioner C.
Ex., New Delhi4; and
(b) Himani Singh vs. Commissioner of
Customs, Meerut5.
(ii) The services were used for
modernization/renovation/repairs of plant and
machinery in the factory in areas of Pellet Plant, Silo,
Steel Melting Shop, Ferro Alloy Division, Drum
Scrubber, Power Plant, Rain Water Harvesting unit,
Furnace, etc. The said services are covered in the
main portion of the definition of „input services‟ as
being „used by a manufacturer, whether directly or
indirectly, in or in relation to the manufacture of final
products‟ AND the inclusive portion as being „service
used in relation to modernization, renovation, repairs
of factory‟;
(iii) The exclusion clause in the definition for work
contract/construction services for construction of
building or civil structure or part thereof does not
apply to the facts of the present case as it pertains
to pure construction works unrelated to manufacture.
In this connection, reliance has been placed on the
following decision of the Tribunal:
(a) Jai Balaji Industries Ltd. vs. Commissioner
of Central Excise, Customs & ST,
Durgapur6.
(iv) In any case, exclusion clause has to be construed
restrictively and cannot be permitted to defeat the
purpose of the main clause and render the same
4. 2010 (262) ELT 467 (Tri.-Del.)
5. 2010 (255) ELT 254 (Tri.-Del.)
6. Excise Appeal No. 76215 of 2016 (Tri.-Kol.)
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nugatory. In this regard, reliance has been placed
upon:
(a) Delhi Airport Metro Express Pvt. Ltd. vs.
Delhi Metro Rail Corporation7.
(v) The show cause notice dated 26.04.2016 pertains to
the period 01.04.2011 to 30.11.2015 and has been
issued invoking the extended period of limitation
under section 11A(4) of the Central Excise Act,
19448. The extended period of limitation could not
have been invoked. In this regard, reliance has been
placed upon the following decisions:
(a) Continental Foundation Joint Venture
Holding vs. Commissioner of C. Excise,
Chandigarh9;
(b) Vandana Global Ltd. vs. Comm. of CGST, C.
Ex. & Cus., Raipur10; and
(vi) Neither interest could have been charged nor could
the penalty be imposed.
11. Shri Rakesh Agarwal, learned authorised representative appearing
for the department, however, supported the impugned order and
submitted that the scope of the remand was limited to determining the
duty liability after verification of the works orders and actual use of
services and, therefore, the contention that the extended period of
limitation could not be invoked cannot be raised. Learned authorised
representative also submitted that though the services rendered by the
appellant may be input services covered under the main definition but if
7. (2022) 9 SCC 286
8. the Excise Act
9. (2007) 10 SCC 337
10. 2022 (56) G.S.T.L. 310 (Tri.-Del.)
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they are covered by the exclusion clause, the appellant would be not
eligible to avail CENVAT credit.
12. The submissions advanced by the learned counsel for the
appellant and the learned authorised representative appearing for the
department have been considered.
13. To appreciate the submissions, it will be appropriate to reproduce
the definition of „input service‟ under rule 2(l) of the Credit Rules, as it
stood prior to 01.04.2011, from 01.04.2011 to 30.06.2012 and then
w.e.f. 01.07.2012.
Prior to 01.04.2011
"2(l) "input service" means any service,-
(i) used by a provider of taxable service for providing
an output service, or
(ii) used by the manufacturer, whether directly
or indirectly, in or in relation to the
manufacture of final product and clearance
of final products upon the place of removal,
and includes services used in relation to setting up,
modernization, renovation or repairs of a factory,
premises of provider of output service or an office relating
to such factory or premises, advertisement or sales
promotion, market research, storage upto the place of
removal, procurement of inputs, activities relating to
business, such as accounting, auditing, financing,
recruitment and quality control, coaching and training,
computer networking, credit rating, share registry, and
security, inward transportation of inputs or capital goods
and outward transportation upto the place of removal."
(emphasis supplied)
From 01.04.2011 upto 30.06.2012
"2(l) "input service" means any service,-
(i) used by a provider of taxable service for providing
an output service; or
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(ii) used by a manufacturer, whether directly or
indirectly, in or in relation to the
manufacture of final products and clearance
of final products upto the place of removal,
and includes services used in relation to
modernization, renovation or repairs of a factory,
premises of provider of output service or an office relating
to such factory or premises, advertisement or sales
promotion, market research, storage upto the place of
removal, procurement of inputs, accounting, auditing,
financing, recruitment and quality control, coaching and
training , computer networking, credit rating, share
registry, security, business exhibition, legal services,
inward transportation of inputs or capital goods and
outward transportation upto the place of removal; but
excludes services,-
specified in sub-clauses (p), (zn), (zzl), (zzm), (zzq),
(zzzh) and (zzzza) of clause (105) of section 65 of the
Finance Act (hereinafter referred as specified services), in
so far as they are used for-
a. construction of a building or a civil structure
or a part thereof; or
b. laying of foundation or making of structures for
support of capital goods,
except for the provision of one or more of the specified
services; or
xxxxxxxxx"
(emphasis supplied)
With effect from 01.07.2012
"2(l) "input service" means any service,-
(i) used by a provider of output service for providing
an output service; or
(ii) used by a manufacturer, whether directly or
indirectly, in or in relation to the manufacture of
final products and clearance of final products upto
the place of removal,
and includes services used in relation to modernization,
renovation or repairs of a factory, premises of provider of
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output service or an office relating to such factory or
premises, advertisement or sales promotion, market
research, storage upto the place of removal, procurement
of inputs, accounting, auditing, financing, recruitment and
quality control, coaching and training, computer
networking, credit rating, share registry, security,
business exhibition, legal services, inward transportation
of inputs or capital goods and outward transportation upto
the place of removal.
but excludes-
(A) service portion in the execution of a works
contract and construction services including service
listed under clause (b) of section 66E of the Finance Act
(hereinafter referred as specified services) in so far as
they are used for-
(a) construction or execution of works contract
of a building or a civil structure or a part
thereof; or
(b) laying of foundation or making of structures for
support of capital goods, except for the provision
of one or more of the specified services; or"
(emphasis supplied)
14. It would be seen from the aforesaid definition of „input service‟ in
rule 2(l) of the Rules that while the „means‟ part of the definition has
continued to remain the same pre amendment or post amendment, but
the „includes‟ part and the „excludes‟ part of the definition of „input
service‟ have underdone changes. Though „services used in relation to
setting up‟ of a factory was included in the inclusive part of the
definition of „input services‟ prior to 01.04.2011 but it was deleted
w.e.f. 01.04.2011. The „excludes‟ part in the definition of „input service‟
was added w.e.f. 01.04.2011 and it provided that services specified in
certain sub-clauses of clause (105) of section 65 of the Finance Act in
so far as they were used for construction of a building or a civil
structure or a part thereof would be excluded w.e.f. 01.04.2011. It is
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also seen that the „excludes‟ part of the definition of „input service‟ was
further amended w.e.f. 01.07.2012.
15. As noticed above, the dispute in the present appeal relates to the
amount of Rs. 64,04,899/-, which consists of Rs. 63,29,533/- which
was dropped by the adjudicating authority in respect of the show cause
notice dated 26.04.2016 and an amount of Rs. 75,366/- which was
dropped by the adjudicating authority with respect to show cause notice
dated 09.01.2017. The relevant findings recorded by the adjudicating
authority while dropping the aforesaid demand are as follows:
"20.1 It is thus clear from the above analysis of the
definition of the "input service" that in order to adjudge
whether taxable service in question viz. Industrial &
Commercial Construction service was covered within
the ambit of the definition of the "input service" as
defined under Rule 2 (1) of the Cenvat Credit Rules,
2004 during the relevant period, it is very necessary to
examine and ascertain as to whether such service was
put to use which was other than as covered under the
exclusion clause or not. In the instant case of the
Noticee, I find that in the impugned SCN, it is
alleged that during the course of audit of books
and accounts of the Noticee, it was observed that
they had wrongly availed the credit of service tax
on Industrial and Commercial Construction
service relating to civil work which had
specifically been exclusion from the purview of
definition of "input service" as defined under Rule 2 (1)
of the Cenvat Credit Rules, 2004. However, I find
that such allegation has not been found
supported with the evidences like relevant Works
/Contract orders entered between the Noticee
and service provider, relevant invoices issued by
the service providers etc.
xxxxxxxxxx.
20.2 The Noticee, vide their letter dated
GPIL/ST/F-626 & 451/2019/3716 dated
04.02.2019 have submitted detailed report for the
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entire period covered by this case containing
month- wise details of service providers,
description of the services provided, vendor's
invoice no. and date, amount of service tax credit
involved, total invoice value, purpose for which
the services were used, summary sheet showing
year-wise details of total service tax credit
availed etc. Besides, they have also produced the
copies of the relevant work orders and invoices
on the strength of which the cenvat credit was
taken by them for verification. They have also
submitted additional submission in the matter
where under they have produced details under
Annexure A, B C etc. as explained above and also
produced certificate dated 04.02.2019 of the
Chartered Engineer who has certified the use of
the services in question to defend their case."
(emphasis supplied)
16. The Commissioner, thereafter, meticulously examined the
services covered by the invoices and found that major part of the
services were used in connection with the renovation of the pellat plant
and, therefore, would not covered under the exclusion clause of the
definition of the input service. The Commissioner also found that some
of the services were covered by the exclusion clause and, therefore, the
appellant would not be entitled to avail CENVAT credit. The relevant
findings are as follows:
"23.1 xxxxxxx. Thus, I find that such uses were
not covered under the exclusion clause of the
definition of the "input service" as alleged in the
impugned SCN. Moreover, in the impugned SCN, it
is not specifically explained as to for what reason
said uses were considered as covered under the
said exclusion clause. I therefore find that there
is no justification in the impugned SCN for
proposed denial of the cenvat credit of total Rs
45,87,751/- linked with the said 27 invoices. On
the other hand the Noticee have produced
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sufficient evidences in shape of copies of relevant
invoices, contract orders, Annexure- A enclosed to
their letter dated 04.02.2019, a copy of the certificate
dated 04.02.2019 issued by the Chartered Engineer
certifying the uses of the taxable services received by
the Noticee etc. in support of their contention that they
were entitled for the cenvat credit of Service Tax of Rs
45,87,751/-. Therefore do not find any reason to
disallow the cenvat credit of Rs 45,87,751/-
which was taken/availed by the Noticee on the
strength of said 27 invoices.
23.2 xxxxxxx. On examining the various uses of
services so received by the Noticee under the
cover of said 37 invoices involving cenvat credit
of service tax of Total Rs.13,48,131/-. It is
observed that said services were used either for
renovation of the above referred plants of the
Noticee which have been covered in the inclusion
clause of the definition of the "input service" as
defined under Rule 2 (1) of the Cenvat Credit
Rules, 2004 and not covered under the exclusion
clause of the said definition. Further, in the
impugned SCN, it is nowhere explained on the basis of
use of the individual invoice why such use was
considered as covered under the exclusion clause of the
definition of the input service and proposed to be
disallowed. Whereas, the Noticee have furnished the
invoice-wise year-wise details thereof including the use
of the service received under the each invoice, copies of
the relevant invoices, copies of the relevant
contract/work contract orders along with the certificate
of the Chartered Engineer certifying the use of the
various services received. I therefore find no reason
to disallow cenvat credit of total Rs13,48,131/-
taken/availed by the Noticee during the relevant
period on the strength of said invoices.
xxxxxxxxxxxx
23.5 However, on examining the use of services
received under the cover of 03 invoices during year
2011-12 involving total cenvat credit of service tax
of total Rs. 29,578/- and use of services received
under the cover of 06 invoices involving cenvat
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credit of service tax of total Rs. 70,736/-, I find
that they had used said services in connection with
construction of RO water point and labour rest
shelter, construction of partition wall, construction
of parapet wall at rest centre, construction of
speed breakers, construction at factory gate no.3,
at main factory gate and dismental of civil
structure. Such use of the taxable services in
question is found to be covered under the
exclusion clause of definition of the "input service"
as defined under Rule 2 (1) of the Cenvat Credit
Rules, 2004 and thereby I find that the Noticee
were not entitled to avail cenvat credit of service
tax of total Rs 1,00,314/-."
(emphasis supplied)
17. Similar findings were recorded by the adjudicating authority in
respect of the second show cause notice.
18. The Commissioner, however, while disallowing CENVAT credit to
the appellant recorded the following findings:
"10. From the about definition it is clear that input
service related to work contract, construction service,
laying foundation for support of capital goods etc. are
excluded from input of service. The respondent in
this case has argued before the adjudicating
authority that the services are related to repair or
modernization work with respect to various parts
of the factor.
11. The services which are in the nature of
repair/maintenance of factory or modernization
of plant and machinery etc. are covered in the
definition of input service. They have cited few case
law, where it was held that the modernization and
repair of factory is in the inclusive clause of the
definition of input services. The adjudication authority
has accepted the contention of the respondent and
allowed input service credit. The department has filled
appeal on the ground that the activity carried out is
related to civil construction work which is excluded
from definition of input service.
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12. xxxxxxxxx. There is no doubt as contested
by the respondent that input service related to
modernization, renovation or repair of factory
premises is part of input services. However, the
specific exclusion of construction/work contract
service from the definition of input services with
effect from 01.04.2011; make it very clear that
the respondent is not eligible for credit input
service."
(emphasis supplied)
19. What transpires from the aforesaid order passed by the
Commissioner (Appeals) is that though the Commissioner also
concluded that the input services related to modernization, renovation
or repairs of factory premises and would be part of the input services
but went on to hold that the respondent would not be eligible to avail
credit of these services because of the specific exclusion of
construction/works contract service from the definition of input service
w.e.f. 01.04.2011.
20. It is not possible to accept the reasoning given by the
Commissioner (Appeals). When input service under rule 2(l) includes
any service used in relation to modernization, renovation or repairs of
factory either prior to 01.04.2011 or from 01.04.2011 upto 30.06.2012
or w.e.f 01.07.2012, the appellant would be entitled to avail CENVAT
credit of the input service received in relation to renovation or repairs of
factory and merely because w.e.f. 01.04.2011 the construction of a
building or a civil structure or a part thereof has been excluded from the
definition of input service would not mean that any service used in
relation to renovation or repairs of factory would stand excluded from
the definition of input service. The exclusion part would cover
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constructions at the time of setting up of the plant and would not
include the repairs or renovation works.
21. This issue stands decided in favour of the appellant by the
Tribunal in M/s. Jai Balaji Industries Ltd. vs. Commissioner of
Central Excise, Customs & Service Tax, Durgapur11 and the
relevant portion of the decision is reproduced below:
"16. We find that the definition of "input service"
has an inclusion clause and an exclusion clause. The
intention of the government could never have been
to cover certain services in the inclusion part and at
the same time cover them also in the exclusion
clause. The cases cited by the learned advocate for the
appellants support this view. The expression
"modernisation, renovation or repairs of a factory" was
appearing in the definition of "input service‟ both before
and after 01.07.2012. It has not been denied by the
department that the Coke Oven Project of the appellants
was towards modernization and renovation of their
existing plant/factory.
17. In the case of M/s Reliance Industries vs. CCE
&ST, Rajkot [2022-TIOL-359-CESTAT-AHM] decided on
13.04.2022, the facts were similar to that of the
present case where the party had undertaken
modernization and expansion of their facility. It was
held as under:-
"1. In the year 2015 the appellant undertook
modernization/ expansion of its manufacturing
facilities in their Jamnagar refinery by setting of
facilities such as Coke Gasification Island, Air
Separation Unit (ASU), CoRecovery Unit, Sulphur
Recovery Unit (SRU), Refinery Off-Gas Cracker Plant
(ROGC),Low Density Polyethylene Plant (LDPE),
Linear Low Density Polythylene Plant (LLDPE), the
Captive Power Plant etc. This project was
nomenclated by the appellant as the J3 project. The
erection, commission, installation service and works
11. Excise Appeal No. 76215 of 2016 decided on 04.08.2022
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contract service in dispute were rendered under 81
contracts by 41 contractors/ service providers.
.............................
4.10 Without prejudice to our above findings, we further find that the appellant's factory is admittedly huge existing petroleum industry and working for decades. The ECIS service was used for expansion, renovation and modernization of overall existing petroleum plant. As per inclusion clause of the definition the services relating to modernization, renovation is an admissible input service. In our view, even though service of construction of building or civil structure are falling under the exclusion clause but even if similar service is used for renovation and modernization of existing factory, the credit is admissible. The exclusion applies only in respect of such service as specified therein which are used for initial setting of the factory. It is pertinent to note that when the exclusion was brought in the rules, services relating to setting up of the factory was removed from the inclusion clause of the definition of input service in rule 2(l) of Cenvat Credit Rules, 2004 therefore, there is a direct nexus of the service mentioned in the exclusion clause and setting up of the factory. It is important to note that the legislature consciously continued the services of renovation, modernization, repairs appearing in the inclusion clause of definition of input service. This clearly shows that any service relating to modernization, renovation of the existing factory is admissible as input service which is the direct case of the appellant. (emphasis supplied)..."
18. In the above decision reliance was placed on the earlier decision in the case of Ion Exchange (I) Ltd. Vs. Commissioner of C. Ex., Cus. & S.T., Surat-II [2018 (12) G.S.T.L. 302 (Tri. - Ahmd.)] wherein it was held as under:-
"8. A plain reading of the said provisions makes it clear that service utilized in relation to modernization, renovation and repair of the 17 E/51211/2020 factory are definitely fall within the meaning of 'input service' even though; construction of a building or civil structure or part thereof has been placed under exclusion clause of the said definition of 'input service'. After amendment to the definition of the 'input service', a clarification issued by the Board vide Circular No. 943/4/2011- CX, dated 29-4-2011 whereunder answering to the questions raised on the eligibility of credit of service tax paid on construction service as an 'input service' used in modernization, renovation or repair, it has been clarified that the said services being provided in the inclusive part of definition of 'input service' are definitely eligible to credit. Thus, harmonious reading of the inclusive part of the definition and the exclusion clause mentioned at clause
(a) relating to construction service of the definition of 'input service', it is clear that the construction service relating to modernization, renovation and repair of the factory continued to be within the meaning of 'input service' and accordingly, the Service Tax paid on such service is eligible to credit. Undisputedly, the appellant carried out modernization/renovation work to meet USA, FDA guidelines for manufacture of their products therefore, the service tax paid on such construction service is eligible to credit. In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per the law."
19. Reliance was also placed on the decision in the case of Mahle Engines Components India P. Ltd Vs. Commr. Of C. Ex., Indore -2018 (363) E.L.T. 1150 (Tri.
- Del.) wherein it was held as under:-
"6. With regard to the availment of Cenvat credit of the Service tax on painting of the factory building & machinery, I find that the Authorities below have denied Cenvat credit on the ground the construction of building or civil structure is falling under the Exclusion Clause contained in the definition of "input service" under Rule 2(1) of the Rules. However, on perusal of the sample copies of the invoices issued 18 E/51211/2020 by the service provider, I find that the services were provided in relation to the painting of the factory building and plant & machinery, which are appropriately classifiable under category of "renovation or repair of the factory" contained in the inclusive part of the definition of the "input service".
Thus, I am of the considered view that such service falls under the purview of the "input service" for the purpose of availment of Cenvat credit. Therefore, denial of Cenvat credit and imposition of penalty on the appellant will not be sustainable."
20. Further, recently in the case of M/s Bombay Market Art Silk Cooperative (Shop & Warehouse) Society Ltd vs CCE & ST Surat-I [2022-TIOL-444-CESTAT-AHM], decision dated 17.05.2022, it was held as under:-
"5. From the above decision of this Tribunal it is clear that any construction and works contract if used for repair and renovation of existing factory, the same falls under inclusion clause of definition of Input Service, accordingly, the Cenvat credit is admissible. The impugned order is set aside and the appeal is allowed."
21. Further, the Board itself in Circular No. 943/4/2011- CX, dated 29-4-2011 has clarified as under:-
4. Is the credit of input Credit of input services used services used for for repair or renovation of repair or renovation factory or office is allowed.
of factory or office Services used in relation to available? renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, are specifically provided for in the inclusive part of the definition of input services.
22. In view of the above the Appellants have correctly taken credit of service tax paid/borne in respect of all services which were used for the Coke Oven Project as part of the modernization/renovation plan of the existing plant/factory."
(emphasis supplied) 19 E/51211/2020
22. In view of the aforesaid decision of the Tribunal rendered in Jai Balaji Industries, the order passed by the Commissioner (Appeals) denying the CENVAT credit to the appellant merely for the reason that though the services that had been rendered were renovation or repair services which the appellant had received would be covered by the „includes‟ part of the definition but the appellant cannot avail CENVAT credit because of the exclusion clause cannot be sustained.
23. The order dated 26.08.2020 passed by the Commissioner (Appeals) is, accordingly, set aside and the appeal is allowed.
(Order pronounced on 08.11.2023) (JUSTICE DILIP GUPTA) PRESIDENT (P. ANJANI KUMAR) MEMBER (TECHNICAL) Shreya, Jyoti