Cenvat credit on pre-amendment factory setup services remained available despite later invoicing, payment and availment.

Cenvat credit on services used for setting up a factory remained admissible where the services were completed before 01.04.2011, even though invoices, payment and credit availment occurred later. The unamended Rule 2(l) of the Cenvat Credit Rules, 2004 covered services used in relation to setting up a factory, and Rule 4(7) permitted credit to be taken on receipt of invoice, so delayed billing did not defeat credit already earned under the law in force when the services were rendered. The later amendment could not retrospectively deny that entitlement, and the denial of credit was unsustainable.

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Issues: Whether Cenvat credit was admissible on services used for setting up a factory where the services were rendered before 01.04.2011 but invoices, payment and credit availment occurred thereafter.

Analysis: The dispute turned on the date of provision of service and not merely on the date of invoicing or payment. The record showed that production had commenced in March 2011, the contractors confirmed completion of work before 01.04.2011, and the appellant had informed the Department. Under the unamended definition of input service in Rule 2(l) of the Cenvat Credit Rules, 2004, services used in relation to setting up of a factory were covered. Rule 4(7) of the Cenvat Credit Rules, 2004 recognized availment of credit on receipt of invoice, so delayed billing or payment did not destroy a credit that had already accrued under the then prevailing law. The Board circular also clarified that credit remained available where services were provided before 01.04.2011 even if payment was made later.

Conclusion: Credit was admissible and the denial was unsustainable, since the services had been completed before the amendment and the later availment was only a procedural consequence.

Ratio Decidendi: Credit on input services earned under the law applicable on the date of service cannot be denied merely because invoicing, payment, or availment occurred after a subsequent amendment, where the services were already covered by the unamended definition and the statute permits delayed availment on receipt of invoice.

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