TaxTMI 
TaxTMI 
2023 (1) TMI 54
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....services in relation to fabrication of plant and machinery in the factory and making plant and machinery operational. The show cause notice essentially relies on the changes made in the definition of input services appearing in Rule 2(l) of the Cenvat Credit Rules, 2004. The changes made in the definition are as follows: Before 01.04.2011: "2(l) "input service" means any service,- (i) used by a provider of taxable service for providing an output service, or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory,.......... ......................................................upto the place of removal:" After 01.04.2011 and as amended "2(l) "input service" means any service. - (i) used by a provider of taxable service for providing an output service, or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and....
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....lution control board. -Consulting charges for Govt. approvals & for annual inspection of boilers. 19,15,18,523 4A 2. Business support service -Refrigerator, freeze service charge -Waste disposal & Boiler erection charges. - Low site material unloading storage. - Installation of diesel generator package. 2,91,03,030 4B 3. Erection & Commissioning service - Installation & Commission of pipes, fittings, diesel generator sets and off-GAS VAR system. -Structural Fabrication, Equipment installation, piping insulation & painting charges. - Manpower for mechanical works -Dismantling/repairs/painting of boiler. -AMC charges for voltas make chiller. 1,29,85,736 4C 4. Clearing & Forwarding Service Clearing & Forwarding agent Services 1,27,94,777 4D 5. Repair & Maintenance Service -Container unloading, wooden packaging. - AMC charges & Waste disposal. -HW disposal for co-processing -Service charges for PLC system. - Installation of new electrical panel. -Repair & Painting work. 59,14,823 4E 6. Installation & Commission service -Stru....
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....paper license 15,759 5B 29. Commission & Installation Service Commissioning of Off-GAS VAR system 15,517 5C 30. Placement Service Placement services 13,296 5D 31. Scientific & Technical Consultancy service Services in relation to testing analysis 12,286 5E 32. Telephone Service Telephone services 345 5F Total 27,75,07,510 He argued that all these services are covered under the definition of input service as it existed after amendment w.e.f. 01.04.2011 also i.e. even after deletion of word 'setting up' from the definition of the input service. 2.1 He argued that all these services are used in or in relation to manufacture of finished goods without availing these services, no manufacturing could have possibly taken place as there would have been no factory. He argued that in these circumstances, the input credit of these services is admissible in term of the main part of the definition of input service. He further argued that the same principle has been relied in the decision of Tribunal in case of Reliance Industries Limited (supra) wherein the credit under Erection Commission....
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....es for which the appellant has taken the credit. He pointed out that deletion of the words 'setting up and activities relating to business' has not implication as far as availment of credit by the appellant is concerned. 2.6 Learned counsel argued that all the amendments made in the definition of input service has to be read harmoniously. He pointed out that following changes have been made in the definition of input service. E.3 In the inclusive clause of the new definition with effect from 1.4.2011, the following phrase have been specifically deleted:- i) Setting up which prefixed services in relation to factory or an office relating to such factory ii) Activities relating to business, such as which prefixed specific inclusions. E.4 The following specified services, if they are used for construction of a building of a civil structure or a part thereof, or laying of foundation or making of structures for support of capital goods, have been excluded w.e.f. 1.4.2011: i) A service provided by an architect in his professional capacity: or ii) A service provided by a port or any person authorized by the port, in relation to port service; or iii) A service provid....
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.... part of appellant to avail ineligible credit. The only allegation against the appellant is that they have not specifically intimated the fact that they are availing credit on input services for setting up of the factory. He argued that the said factory cannot be used against the appellant as it has been a subject matter of lot of litigation since the said amendment was made. He argued that no penalty in these circumstances can be imposed on the appellant. 3. Learned Authorized Representative relies on the impugned order. He particularly relied on para 4.3, 4.7, 4.8, 4.11, 4.12, 4.13, 4.14, 4.19 of the impugned order. 4. We have considered rival submissions. The appellants are engaged in manufacture of goods falling under Chapter 39 of the Central Excise Tariff Act, 1985 and availed cenvat credit of service tax during setting up of the factory. It is seen that the definition of input service prior to 2011 read as follows: "(l) input service' means any service, - (i) used by a provider of taxable service for providing an output service; or (ii) used by the manufacturer whether directly or indirectly, in or in relation to the manufacture of final products and clear....
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....r (C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;" Further amendments were made in the definition of input service on 01.04.2012, the said definition, therefore, read as follows: (l) "input service" means any service, - (i) used by a provider of output service for providing an output service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching an....
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.... up of 'factory, premises of provider of output service or the office relating to said factory or premises' would not be admissible as the word setting put has been deleted from the definition of input service. This very issue has been examined by Tribunal in the case Reliance Industries Limited 2022-VIL-281-CESTAT-AHM-CE. In the said decision similar dispute was examined. The Tribunal in the case of Semco Electricals Private Limited 2010 (18) STR 177 has held that in order to qualify as an input service, the service has to either fall within the means part or inclusive part of the definition of input service, is reproduced below: "Both parts of the definition have to be construed harmoniously 9.1 The definition of the term "Input service‟ as defined under Rule 2(l) of the Cenvat Credit Rules, 2004 has two parts - (i) the "means‟ part which is the main part of the definition and (ii) "inclusive‟ part which is illustrative and certainly not exhaustive. 9.2 The "means‟ part of the definition covers any service used directly or indirectly, in or in relation to manufacture of the final products and clearance of the final products from the place of remov....
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.... clause includes following: (A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for- (a) construction or execution of works contract of a building or a civil structure or a part thereof; or Thus, the exclusion clause would obviously make such services ineligible for the cenvat credit under the head of 'Input Service'. It is seen that the appellant has claimed that they have on their own not availed such credits relating to the exclusion clause. 7. Another issue relates to the denial of cenvat credit invoking Rule 4(7) of the Cenvat Credit Rules. The amount of Rs. Rs. 29,29,272/- has been denied invoking Rule 4(7) of the Cenvat Credit Rules. The appellant have contended that they have availed the said credit within the period prescribed under Rule 4(7) in their ST-3 Returns and they have claimed that they have produced the said returns before the original adjudicating authority however, no findings have been given by the original adjudicating authority on this defence of the appellant. We find t....