CENVAT credit for factory-setting services after amendment remains admissible when covered by the main definition and not expressly excluded.

CENVAT credit on consultancy and related input services used for setting up and expanding a plant after 01.04.2011 remains admissible where the services are used directly or indirectly in relation to manufacture and are not expressly excluded under Rule 2(l) of the Cenvat Credit Rules, 2004. Although the inclusive limb was amended and omitted express reference to setting up a factory, such services can still fall within the main limb because they are necessary for establishing the manufacturing facility. On that basis, denial of credit, along with demand, interest and penalty, is unsustainable.

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Issues: Whether CENVAT credit on consultancy and related input services used for setting up a plant and factory after 01.04.2011 is admissible under Rule 2(l) of the Cenvat Credit Rules, 2004.

Analysis: The disputed services were used in relation to the establishment and expansion of the plant, which was directly connected with manufacture. The post-01.04.2011 definition of input service contains a main limb covering services used by a manufacturer, directly or indirectly, in or in relation to manufacture, together with an inclusive and an exclusive part. Services used for setting up the factory, though omitted from the inclusive part after amendment, were held to fall within the main limb because without such services the factory could not be established for manufacture. Since the services were not specifically excluded, the credit could not be denied. The issue was treated as already settled and no demand, interest, or penalty could survive.

Conclusion: The appellant was entitled to avail CENVAT credit on the input services used for setting up the plant and factory after 01.04.2011; the demand, interest, and penalty were unsustainable.

Ratio Decidendi: Services used for setting up a factory after 01.04.2011 qualify as input services if they fall within the main part of Rule 2(l) and are not expressly excluded.

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