TaxTMI 
TaxTMI 
2024 (11) TMI 716
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....capital goods while setting up their new plant is not admissible to appellant from 01.04.2011 onwards. 2. Shri Vinay Kansara, Learned Counsel appearing on behalf of the Appellant submits that even the wording "setting up" was removed with effect from 01.04.2011 from the inclusive limb of the definition of input service, the Cenvat credit on the subject input service is still admissible in terms of the expression "used by a manufacturer, whether directly or indirectly, in or in relation the manufacture of final product" which is in the main limb. He further submits that the subject input services were used for procurement and erection and installation of capital goods/ machineries/ equipment which was subsequently used for manufacture of excisable goods. Therefore, these services qualify the term of the main limb of the input service as defined under Rule 2 (l) of Cenvat Credit Rules, 2004. Therefore, the credit is clearly admissible. The credit is admissible irrespective of the fact that whether the same has been received or used prior to commercial production. In support he placed reliance on the following judgments:- Evonik Speciality Silica India Pvt. Ltd. Vs. CCE (2024) 18 C....
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....clause of the definition which reads as under :- "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 modernization, renovation or repairs of a factory. remises, 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 and training, computer networking credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal." 4.1 From the reading of the above rule, it can be seen that as per the main clause of the definition given in Rule 2 (l)(ii) any service used by a manufacturer, whether directly or indirectly, in or in relation to manufacture of final product and clearance of fin....
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....s inclusive part specifically included the services availed for setting up the factory. After 1.4.2011, it has three parts- a main part, an inclusive part and an exclusive part. The services used for setting up the factory are neither in the inclusive part of the definition nor the exclusive part of the definition. Therefore, such services were neither specifically included nor were specifically excluded. 17. It takes us to the main part of the definition which must be examined. If it is wide enough to cover the services in question, CENVAT credit will be available, otherwise it will not be available. The main part includes "services used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal." The term manufacture is not defined in the Rules. 18. The definitions as per rule 2 of CCR 2004 reads as follows: RULE 2. Definitions. -(1) In these rules, unless the context otherwise requires, (a) (b)..... (1) (2) The words and expressions used in these rules and not defined but defined in the Excise Act shall have the meanings respectively assigned to them in ....
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....ously covered as 'input services' under Rule 2 (1) (ii) of the CENVAT Credit Rules, 2004 as they stood during the relevant period (post 1.4.2011). The mere fact that it is again not mentioned in the inclusive part of the definition makes no difference. Once it is covered in the main part of the definition of input service, unless it is specifically excluded under the exclusion part of the definition, the appellant is entitled to CENVAT credit on the input services used. This Bench has already taken this view in Kellogs. Similar views have been taken by the other Benches in the other cases mentioned above. 23. In view of the above, the impugned orders denying CENVAT credit and ordering its recovery along with interest and imposing penalties cannot be sustained. The impugned orders are set aside and the appeals are allowed with consequential reliefs, if any." In the case of Aditya Aluminium, the Kolkata bench of CESTAT on the identical issue passed the following order :- "6. We observe that the impugned order has denied the credit availed by the Appellant on the input services availed for 'setting up of a factory as the same has been specifically omitted from the "....
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....find that the definition of 'input service prior to 1.04.2011 had two parts- a main part of the definition and an inclusive part of the Excise Appeal No. 76189 of 2018 5 definition. This inclusive part specifically included the services availed for 'setting up the factory'. After 1.04.2011, it has three parts- a main part, an inclusive part and an exclusive part. The services used for setting up the factory are neither in the inclusive part of the definition nor the exclusive part of the definition. Therefore, such services were neither specifically included nor were specifically excluded. 17. It takes us to the main part of the definition which must be examined. If it is wide enough to cover the services in question, CENVAT credit will be available, otherwise it will not be available The main part includes "services used by a manufacturer, whether directly or indirectly, in or in relation to the manufacturer of final products and clearance of final products up to the place of removal. The term manufacture is not defined in the Rules. 18. The definitions as per of CCR 2004 reads as follows RULE 2 Definitions. (1) in these rules, unless the context otherwise requir....
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....4.2011. Although setting up the factory is not manufacture in itself, it is an activity directly in relation to manufacture. Without setting up the factory, there cannot be any manufacture. Service used in setting up the factory are, therefore, unambiguously covered as "input services' under Rule 2 (1) (ii) of the CENVAT Credit Rules 2004 as they stood during the relevant period (post 1.4.2011) The mere fact that it is again not mentioned in the inclusive part of the definition makes no difference. Once it is covered in the main part of the definition of input service, unless it is specifically excluded under the exclusion part of the definition, the appellant is entitled to CENVAT Excise Appeal No. 76189 of 2018 7 credit on the input services used. This Bench has already taken this view in Kellogs. Similar views have been taken by the other benches in the other cases mentioned above. 23. In view of the above, the impugned orders denying CENVAT credit and ordering its recovery along with interest and imposing penalties cannot be sustained. The impugned orders are set aside and the appeals are allowed with consequential reliefs, if any. 9. In the case of M/s Bharat Coki....
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....(5) TMI 718 - CESTAT, Kolkata. Bharat Coking Coal Ltd., Vs. CCE & ST, Ranchi 2023 (6) TMI 297- CESTAT-Kolkata. 11. Following the decisions cited above, we observe that the subject input services have a direct nexus with the manufacture of finished goods in the 'means' clause of the definition of input services. Accordingly we hold that even if the word 'setting up of a factory' has been specifically excluded from the definition w.e.f. 01.04.2011, such services are covered within the ambit of main clause of the definition. Hence, it would still qualify as an input service as per Rule 1(1) of CCR, 2004. In the light of the above discussions, we allow the Cenvat credit availed by the Appellant on the input services used in setting up of the factory. Consequently, the impugned order confirming the demand along with interest and imposing penalty is set aside. 12. In view of the above discussion, we allow the appeal filed by the Appellant." Similarly the CESTAT bench of Mumbai in the case of Sesa Sterlite Ltd observed as under:- "3. The definition of input service, prior to its amendment w.e.f. 01.04.2011 provided the phrase "used in relation to setting up, m....
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....nufacture; b) Processes incidental or ancillary to manufacture which are also manufacture; c) Activities directly in relation to manufacture (i.e., in relation to 'a' and 'b' above); d) Activities indirectly in relation to manufacture (i.e., in relation to 'a' and 'b' above): 22. All four of the above qualify as input service as per Rule 2(1) (ii) as applicable post 1.4.2011. Although setting up the factory is not manufacture in itself, it is an activity directly in relation to manufacture. Without setting up the factory, there cannot be any manufacture. Services used in setting up the factory are, therefore, unambiguously covered as 'input services' under Rule 2 (1) (ii) of the CENVAT Credit Rules, 2004 as they stood during the relevant period (post 1.4.2011). The mere fact that it is again not mentioned in the inclusive part of the definition makes no difference. Once it is covered in the main part of the definition of input service, unless it is specifically excluded under the exclusion part of the definition, the appellant is entitled to CENVAT credit on the input services used. This Bench has already taken this view in Kellogs. Simila....
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....rvices are used in or in relation to the manufacture of final products and if the nexus of such services with the manufacture is established. Further, I find that it has consistently been held by the Hon'ble Supreme Court that the words 'in relation to manufacture' have been used to widen and explain the scope, meaning and content of the definition and applying the same ratio, CENVAT credit of service tax paid on input services is admissible so far as input services have been used directly or in directly, in or in relation to the manufacture of final product even if the term selling up has been deleted from the inclusive portion of the definition Similarly, in the case of Birla Corporation Limited vs. Commissioner-2014 (34) STR 589, CENVAT credit on erection, commissioning and installation services have been allowed Therefore, by following the ratio of the decisions cited supra, I am of the considered view that denial of CENVAT credit on erection, commissioning and installation of machinery is not sustainable in law. Therefore, I set aside the impugned order by allowing the appeal of the appellant. Once I am allowing the appeal of the appellant on merit, I am not requir....