Cenvat credit on factory construction services applies under the pre-amendment definition, with later narrowing held prospective only.

Cenvat credit on service tax paid for construction services used to set up a new manufacturing plant was allowable for the period before 1-4-2011 because the then-existing definition of input service included services used for setting up a factory. The later amendment deleting that phrase was held to operate prospectively, not retrospectively, so the denial of credit on the basis of the amended definition was unsustainable. Credit had therefore to be determined under the definition applicable during the relevant period.

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Issues: Whether the assessee was entitled to Cenvat credit on service tax paid on construction services used for setting up a new manufacturing plant before 1-4-2011, and whether the amendment to the definition of input service with effect from 1-4-2011 operated retrospectively.

Analysis: The relevant period was prior to 1-4-2011, when the definition of input service expressly included services used for setting up of factory. The later amendment deleting those words was held to have no retrospective application. As the services were used for setting up a new plant within the same factory premises, the credit could not be denied on the basis of the subsequent amendment.

Conclusion: The assessee was eligible for Cenvat credit, and the denial of credit was unsustainable.

Ratio Decidendi: An amendment narrowing the definition of input service operates prospectively unless expressly made retrospective, and credit must be determined under the definition applicable during the relevant period.

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