Cenvat Credit available on construction service for renovation, modernization upgradation of existing plant

The CESTAT, Ahmedabad in M/s. General Motors India P Ltd. [Excise Appeal No. 11124 of 2015-DB dated September 13, 2023] held that, input tax paid for construction service used in relation to modernization, renovation of the existing factory is available as Cenvat credit per Rule 2(l) of Cenvat Credit Rules, 2004 (“the CCR”).


M/s. General Motors India P Ltd. (“the Appellant”) claimed Cenvat credit paid for services related to construction and restoration services for upgradation of the factory premises during the period from April 2008 to October 2012.

The Adjudicating Authority denied the Cenvat Credit in respect of construction service on the ground that factory was excluded from the definition of input service.

Aggrieved by the Impugned Order the Appellant filed an appeal before the CESTAT, Ahmedabad.

The Appellant contended that construction service received by them is in respect of expansion, modernization, modification of the existing plant was not excluded in the definition of Input service under Rule 2(l) of CCR. It is only setting up of plant was removed from the definition of input service but other activity such as modernization, renovation still remained included in the definition of input services therefore the Cenvat Credit is admissible on construction service.


Whether assessee can claim Cenvat Credit of construction service utilised for renovation, modernization upgradation of plant?

The CESTAT, Ahmedabad in Excise Appeal No. 11124 of 2015- DB held as under:

  • Observed that, construction service received for expansion of the existing plant, fall under the term modification, renovation, upgradation etc. as input service under Rule 2(l) of the CCR.
  • Noted that, there is no dispute that the Appellant used the construction service in relation to modification, renovation, upgradation of the existing plant. Therefore, in view of the definition, which includes these services in the definition of input service, the Appellant has correctly availed Cenvat credit on construction service.

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CA Bimal Jain
A2Z Taxcorp LLP is a boutique Indirect Tax firm having its offices at New Delhi and Guwahati specializing in GST, Central Excise, Custom, Service Tax, VAT, DGFT, Foreign Trade Policy, SEZ, EOU, Export – Import Laws, Free Trade Policy, etc. It is a professionally managed firm having a team of experienced and distinguished Chartered Accountants, Company Secretary, Lawyers, Corporate Financial Advisors and Tax consultants to provide various services like litigation and representation, transaction advisory, diagnostic reviews/ health checks, audit defense & protection, retainership & compliance, configuration of tax efficient business model etc. Its clientele consists mainly of Foreign MNC, large/mid-sized Indian companies which includes exporters, FMCG, consumer durables, automobiles, aerated beverages, ceramic tiles, real-estate, hospitality, etc. Our clients include Varun Beverages Limited, Kajaria Ceramics Limited, L.G. Electronics India Private Limited, Shipra Hotel Limited, Multani Pharmaceuticals Limited, Shangri-La Eros Hotel etc. Flat No. 34B, Ground Floor, Pocket - 1, Mayur Vihar, Phase–I, Delhi – 110091 India Desktel:+91-11-42427056 Mobile:+91 8076563802 [email protected] www.a2ztaxcorp.com
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