Assessee's appeal allowed, Revenue's appeal dismissed, with exception on goods clearance amount. Cross-objection disposed.

The appeal filed by the assessee-appellant was allowed, except for the amount of Rs.38,39,364/- which was rightly reversed on the clearance of goods as such. The appeal filed by the Revenue was dismissed. Cross-objection was disposed of.

---

---

Issues Involved:
1. Early hearing of appeals.
2. Disallowance of Cenvat credit on goods and services used for setting up premises.
3. Nexus requirement between input services and output services.
4. Denial of Cenvat credit on capital goods not covered under specified headings.
5. Denial of Cenvat credit due to non-production of original duty paying documents.
6. Invocation of extended period of limitation.

Detailed Analysis:

1. Early Hearing of Appeals:
The applicants/appellants filed a Misc. Application for the early hearing of Appeal No. ST/86542 of 2015. With the consent of both sides, the Tribunal took up the said appeal along with Appeal No. ST/86218 of 2015 for hearing and passed a common order.

2. Disallowance of Cenvat Credit on Goods and Services Used for Setting Up Premises:
The appellants, engaged in rendering taxable services under the category of Information Technology and Information Technology enabled services, availed Cenvat credit on goods and services used for setting up their premises. The adjudicating authority disallowed the credit for services received after 01.04.2011, based on the amendment in the definition of input service. The Tribunal, however, held that services used in relation to setting up premises are also services used for providing output services. The Tribunal cited various judgments supporting this view, including those of the Bombay High Court and the Madras High Court.

3. Nexus Requirement Between Input Services and Output Services:
The adjudicating authority's finding that there must be a direct nexus between input services and output services was contested. The Tribunal clarified that the Cenvat Credit Rules do not stipulate a direct nexus requirement. The goods and services merely need to be used for providing the output services. The Tribunal referenced the Punjab and Haryana High Court's decision in Convergys India Pvt Ltd., which held that even a peripheral connection suffices.

4. Denial of Cenvat Credit on Capital Goods Not Covered Under Specified Headings:
The adjudicating authority denied credit on certain goods not covered under specified headings of the Central Excise Tariff Act. The Tribunal, referencing the Gujarat High Court's decision in Mundra Ports & SEZ Ltd., held that such goods are entitled to credit as inputs if used for setting up premises before 01.04.2011. The Tribunal also noted that the initial classification as capital goods does not bar subsequent claims as inputs.

5. Denial of Cenvat Credit Due to Non-Production of Original Duty Paying Documents:
The adjudicating authority disallowed credit for failure to produce original duty paying documents. The Tribunal found no dispute regarding the receipt, consumption, and utilization of the goods covered by the invoices. It held that non-submission of some original invoices during a later audit could not be a valid ground for denying Cenvat credit.

6. Invocation of Extended Period of Limitation:
The Tribunal found merit in the appellant's argument that the extended period of limitation was not invokable. The issues relating to credit on goods and services used for setting up premises and the requirement of direct nexus are matters of interpretation. Therefore, the extended period could not be invoked in the absence of fraud, suppression, etc.

Conclusion:
The appeal filed by the assessee-appellant was allowed, except for the amount of Rs.38,39,364/- which was rightly reversed on the clearance of goods as such. The appeal filed by the Revenue was dismissed. Cross-objection was disposed of. The order was pronounced in the open court on 02/02/2023.

---