Cenvat credit on factory setup services remained admissible where the services were used in relation to manufacture and not excluded.

Cenvat credit on services used for setting up a factory remained admissible under Rule 2(l) of the Cenvat Credit Rules, 2004, because the disputed services were used in or in relation to manufacture and did not fall within the express exclusion clause. The deletion of the phrase relating to setting up of factory from the inclusive part of the definition did not, by itself, narrow the main scope of input service eligibility, as the inclusive limb was treated as clarificatory rather than exhaustive. On that basis, the credit denial and consequential penalty were unsustainable, and relief followed.

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Issues: Whether Cenvat credit on services used for setting up the factory was admissible under Rule 2(l) of the Cenvat Credit Rules, 2004 despite deletion of the expression relating to setting up of factory from the inclusive part of the definition.

Analysis: The definition of input service during the relevant period was examined in the light of the amended Rule 2(l). The services in dispute were not among the excluded categories, and the record showed that they were used in or in relation to the manufacture of the final product. The omission of the expression relating to setting up of factory from the inclusive clause was treated as not altering the main ambit of the definition, since the inclusive part was regarded as clarificatory and not exhaustive. As none of the disputed services fell within the exclusion clause, the credit could not be denied on that basis.

Conclusion: The disputed services qualified as input services and Cenvat credit was admissible.

Final Conclusion: The denial of credit and the consequential penalty were unsustainable, and the assessee was entitled to relief.

Ratio Decidendi: Services used in or in relation to manufacture remain eligible as input services unless they are specifically covered by the exclusion clause; deletion of an expression from the inclusive portion does not by itself negate eligibility.

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