2018 (11) TMI 68 – CESTAT HYDERABAD – TMI – CENVAT Credit – input services rendered by the service providers while setting up of their plant – labour charges which were for fixing and erection of equipments, buffing work, fixation and erection of equipment work, insulation work etc. for the activity undertaken by the service providers in the factory premises.
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Held that:- The services which were rendered by the service providers were in respect of capital goods and not for laying of foundation or making structures for support of capital goods. Further, it has to be recorded in the findings of the first appellate authority that these services were not used coextensively for manufacture of final products, also seems to be not correct from the factual position as the appellant herein being the manufacturer of bulk drugs, requires installation of various plant and machinery which would contribute towards manufacture of final products.
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In the case in hand, it cannot be said that
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pellant had availed ineligible CENVAT credit in respect of services rendered by the service providers while setting up of their plant. Show cause notice was issued for demand and reversal of such CENVAT credit. Appellant contested the show cause notice on merits as well as on limitation. Adjudicating authority, after following due process of law, dropped the proceedings in respect of the demand raised for the recovery of ₹ 1,09,932/- while confirming demand of ₹ 9,61,652/-as ineligible CENVAT credit, interest thereof and imposed penalty of ₹ 4,80,826/-. An appeal was filed against such an order was rejected by the first appellate authority. Hence this appeal. 4. Ld. Counsel after drawing the attention of the Bench to the facts of the case submits that the services which were rendered by the service providers as per Annexure-B to the show cause notice were labour charges for fixing and erection of equipment, labour charges for provision to HDPE pipe line work, installa
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ority in paras 11 to 13 of the Order-in-Appeal. It is his submission that the first appellate authority has recorded that these services which are received by the appellant are not coextensively used to the manufacture of final products and the Hon ble High Court of Andhra Pradesh in the case of Rayalaseema Hi-Strength Hype Limited [2012(278)E.L.T 167 (AP)] has specifically recorded that unless the gods are used in the manufacture of capital goods, CENVAT credit cannot be claimed even on the repair and maintenance as for manufacture and the repair and maintenance of the plant can not be constituents in the process of manufacture of final products. 6. I have considered the submissions made at length and perused the records. As correctly pointed out by both sides, the issue is regarding availability of CENVAT credit of the service tax on labour charges which were for fixing and erection of equipments, buffing work, fixation and erection of equipment work, insulation work etc. for the act
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bition, legal services, inward transportation of inputs or capital goods and outward transportation up to 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 (B) Services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital goods; or (BA) Service of general insurance business, servicing, repair and maintenance, in so far as they relate to a motor vehicle which is not a capital goods, except when used by (a) a manufacturer of a motor vehicle in respect of a mo
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of foundation or making structures for support of capital goods. Further, it has to be recorded in the findings of the first appellate authority that these services were not used coextensively for manufacture of final products, also seems to be not correct from the factual position as the appellant herein being the manufacturer of bulk drugs, requires installation of various plant and machinery which would contribute towards manufacture of final products. It has also to be seen that the definition of input service (as reproduced herein above) clearly mandates for availing CENVAT credit of the service tax paid on services which were used by manufacturers directly or indirectly, in or in relation for the manufacture and clearance of final products. In the case in hand, it cannot be said that the services rendered by service providers on various activities as enumerated in Annexure-B to the show cause notice were in respect of equipments which are not used for manufacturing of final prod
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