Tribunal overturns order, allows CENVAT Credit for input services in factory setup.

The Tribunal allowed the appeal, setting aside the order confirming the demand, interest, and penalties. It held that the input services for setting up the factory qualify as 'input services' under the CENVAT Credit Rules, and the Appellant is entitled to avail CENVAT Credit on such services.

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Issues Involved:
1. Whether the input services availed for 'setting up of a factory' are covered under the definition of 'input services' post Notification No. 03/2011-CE (NT) dated 01.03.2011.
2. Whether the Appellant is entitled to CENVAT Credit on such input services.

Issue-wise Summary:

1. Definition of 'Input Services' Post Notification No. 03/2011-CE (NT):
The primary issue revolves around the interpretation of 'input services' under Rule 2(I) of the CENVAT Credit Rules, 2004, as amended by Notification No. 03/2011-CE (NT) dated 01.03.2011, effective from 01.04.2011. The Appellant argued that the input services used for setting up the factory should be considered as 'input services' since they are directly related to manufacturing activities. The Tribunal noted that the definition of 'input services' includes services used directly or indirectly in relation to the manufacture of final products. The services used for setting up the factory, although not explicitly mentioned in the inclusive part of the definition, fall within the 'means clause' of the definition.

2. Entitlement to CENVAT Credit:
The Tribunal examined whether the services used for setting up the factory qualify as 'input services' under the amended definition. It referred to previous judgments, including Pepsico India Holdings Pvt. Ltd. Vs. CCT, Tirupati, and M/s Bharat Coking Coal Ltd. Vs. CCE & ST, Ranchi, where it was held that services used for setting up a factory are covered under 'input services' as they are directly related to manufacturing activities. The Tribunal concluded that the input services used for setting up the factory are covered within the 'means clause' of the definition and are not specifically excluded under the 'excludes clause.' Therefore, the Appellant is entitled to CENVAT Credit on such input services.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order that confirmed the demand along with interest and imposed penalties. The Tribunal held that the input services used for setting up the factory qualify as 'input services' under Rule 2(I) of the CENVAT Credit Rules, 2004, and the Appellant is entitled to avail CENVAT Credit on such services.

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