CESTAT Mumbai Grants Cenvat Credit for Consulting Engineer, Fabrication & Erection Services as Input Services.

The CESTAT Mumbai overturned the denial of Cenvat Credit on service tax paid for Consulting Engineer Service, Plant Fabrication & Erection & Commissioning, and Supply of Tangible Goods. The Tribunal determined these services qualify as 'input services' under Rule 2(l) of the Cenvat Credit Rules, 2004, despite the 2011 amendment. The adjudicating authority's order was set aside, and the appeal was allowed, affirming the appellant's entitlement to Cenvat Credit.

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Issues involved: Denial of Cenvat Credit of service tax paid on Consulting Engineer Service, Plant Fabrication & Erection & Commissioning, and Supply of Tangible Goods.

Summary:
The Appellate Tribunal CESTAT MUMBAI addressed the denial of Cenvat Credit of service tax paid on various services in the present dispute. The disputed services were Consulting Engineer Service, Plant Fabrication & Erection & Commissioning, and Supply of Tangible Goods. The adjudicating authority had denied the Cenvat Credit, stating that these services could not be considered as 'input service' u/s Rule 2(l) of the Cenvat Credit Rules, 2004 post 01.04.2011 due to the exclusion of the phrase "setting up" of the factory in the amended definition.

The definition of input service was amended w.e.f. 01.04.2011, replacing the phrase "setting up of the factory" with "used in relation to modernization, renovation or repairs of a factory." Certain excluded categories of services were also incorporated, including services in the execution of works contract and construction services. After considering the disputed services used by the appellants, it was found that these services were not falling under the exclusion clause provided under Rule 2(l)(A). The Tribunal referred to a previous case to support the view that services used in setting up the factory are covered as 'input services' under Rule 2(l) of the Cenvat Credit Rules, 2004.

Consequently, the Tribunal concluded that the denial of Cenvat Credit on the disputed services cannot be sustained as they were used in relation to the manufacture of final products. The impugned order denying the Cenvat Credit and confirming the demands on the appellants was set aside, and the appeal was allowed in favor of the appellant.

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