Appellant granted CENVAT credit for plant setup services linking to manufacturing. Order disallowing credit overturned.

The Tribunal allowed the appellant's appeal, holding that services for setting up a plant had a direct nexus to manufacturing, entitling the appellant to CENVAT credit. The impugned order disallowing the credit was set aside, and the appeal was allowed with consequential relief.

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Issues:
- Availment of CENVAT credit on ineligible input services
- Interpretation of the definition of input service under Rule 2(l) of CENVAT Credit Rules 2004
- Dispute regarding services used in setting up a factory post-amendment

Analysis:
1. The appellant, engaged in manufacturing prepared foods, availed CENVAT credit on services related to a development agreement and lease deed with M/s Sri City (P) Ltd. The Revenue contended that these services were used for setting up the plant, excluded from the definition of input service post-amendment. A show-cause notice disallowed the credit, ordering recovery and imposing a penalty.

2. The appellant's appeal to the first authority was rejected, leading to the current appeal. The appellant argued that the services were used for renting the plot for factory construction, directly linked to manufacturing. The definition of input service under Rule 2(l) was crucial, with a change post-April 2011 excluding "setting up" from the definition.

3. The appellant's counsel highlighted that the definition includes services used directly or indirectly in manufacturing and clearance of final products. The exclusion of "setting up" post-amendment was emphasized, leading to a debate on whether services used for setting up a factory post-amendment are covered under the definition.

4. The Tribunal analyzed the definition comprehensively, noting that services for setting up a plant were neither specifically included nor excluded post-amendment. The main part of the definition allowed credit for services used in or in relation to manufacturing. A direct nexus between the services for setting up the plant and manufacturing was established, leading to the appellant being entitled to CENVAT credit.

5. Consequently, the impugned order disallowing the credit was set aside, and the appeal was allowed with consequential relief. The Tribunal's decision was based on the interpretation of the definition of input service and the direct nexus between the services in question and the manufacturing process.

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