Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ramesh Nair (Judicial Member) partly allowed an appeal which raised the question as to whether the appellant was entitled to Cenvat credit in respect of Input Services namely construction services, fee for architectural structural works for factory plant building, group Medi-claim Insurance, Group personal accident insurance, insurance, motor car/vehicle insurance, labour charges for installation, testing & commissioning of components of VRV System (Centrally AC system) in the office building etc.
Superintendent (AR) appearing on behalf of the Revenue submitted that the Construction and Architectural services are related to construction which is excluded in the definition of Input Services, therefore, the same was not admissible.
The Tribunal after considering the submissions found that right from the beginning the appellant was taking a stand that construction and architectural services are used for the repair and renovation of factory. This submission of the appellant was not effectively rebutted by the Revenue and the Cenvat credit was denied by the lower authorities on the ground that construction service is excluded and appearing in the exclusion clause thus the credit on Construction and Architectural services was denied. The credit in respect of group Medi-claim Insurance, Group personal accident insurance, insurance, motor car/vehicle insurance etc. were denied on the ground these services have no nexus with the manufacturing of excisable goods.
In regards to Construction and Architectural services the Tribunal found that as per various judgments only such construction services which are used in the initial setting up of the factory are excluded. However, in the present case, the factory was already existing and this construction and architectural service were used for the repair and renovation of the existing factory plant. As per the inclusion clause of definition of Input Services, repair and renovation/ modernization is specifically included in the inclusion clause. Therefore, construction or architectural service if used for the initial set up of plant will only be ineligible for Cenvat credit. Whereas as per facts in the present case, the services were used for repair and renovation hence, the credit in terms of the inclusion clause of Input Service is admissible.
In regards to other services, the Tribunal found that these are the services as mandated as per the factory Act for the safety of employees. Therefore, this cannot be said that the services were used for personal use.
The Tribunal cited certain cases where it was established that Cenvat credit is allowed on Insurance Services. The Tribunal was of the view that the appellant is entitled to the Cenvat credit on such services. However, the appellant has admittedly paid an amount of Rs. 2,29,752/- which stands upheld. The appellant had only disputed the amount of Rs. 5,72,011/-. Therefore the same along with penalty and interest were set-aside. As regards the interest and penalty in respect of amount admittedly paid for Rs. 2,29,752/-, it was observed that since the appellant had not utilized the said amount, no interest and penalty corresponding to said amount was payable.[Milestone Preservatives (P) Ltd. v. C.C.E. & S.T., Excise Appeal No. 11905 of 2019-SM, order dated 20-05-2022]
Shri G. Kirupanandan, Superintendent (AR) for the Respondent
