[2015] 55 taxmann.com 73 (Ahmedabad – CESTAT) –Commissioner of Central Excise, Customs and Service Tax, Rajkot vs. Reliance Ports and Terminals Ltd.

Facts:
Assessee was a provider of port services and availed credit of duty paid on capital goods during the period F.Y. 2006-07 and 2007-08. Department denied CENVAT credit on the grounds that capital goods were not installed. Department also disputed CENVAT credit of service tax paid by assessee under reverse charge on the ground that service tax paid u/s. 66A of the Act is not specified under Rule 3 of CCR,2004. Adjudicating Authority decided in favour of the assessee. Aggrieved department filed the appeal before the Tribunal.

Held:
The Tribunal held that as per para 8 of CBEC Circular No. B-4/7/2000 TRU dated 03/04/2000 in the case of capital goods, the CENVAT rules do not provide installation of capital goods as a pre-requisite for taking CENVAT credit. The credit can be taken as and when the capital goods are received in the factory. The Tribunal also observed that, in terms of CBEC Circular No. 267/26/2006-CX-8 dated 28-04-2006, condition of installation for availing CENVAT credit on capital goods was effective till 09- 09-2004 and not thereafter. Relying upon the decision of the Bombay High Court in the case of CCE vs. Ispat Industries Ltd. 2012 (275) ELT 79 (Bom) which held that, when the capital goods are lying in the factory for installation and process of erection is being carried out, the requirement that the goods were in the possession and use of the manufacturer in the year in which the balance credit was availed of can be said to have been fulfilled. Thus the credit on capital goods was allowed in the financial year of receipt and balance in subsequent financial year. As regards dispute on CENVAT credit of service tax paid under reverse charge, it was held that due to retrospective amendment under sub rule (1) of Rule 3 of the Finance Act, 2011 service tax paid u/s. 66A was eligible for credit from 18/04/2006. Revenue’s appeal was dismissed accordingly.