AI Drafter 
TaxTMI 
TaxTMI 
2025 (6) TMI 588
X X X X Extracts X X X X
X X X X Extracts X X X X
....e audit observation dated 30-12-2013. It was stated that the Appellant had availed input service credit of Rs. 12,84,81,546/- during the period September 2011 to October 2012 when there was no production and sale of final goods. It was alleged that input service credit availed in respect of services prior to commencement of production of final products cannot be reasonably considered as "used by the manufacturer in or in relation to the manufacture of final products". It was further alleged that w.e.f. 01-04-2011 the inclusive part of the definition of "input service" under CENVAT Credit Rules, 2004 allowed credit only on services used in relation to modernization, renovation or repairs of a factory but not setting up. 5. Thereafter, SCN dated 03-09-2014 was issued to the Appellant demanding Rs. 12,84,81,546/- along with appropriate interest under Rule 14 of the CENVAT Credit Rules, 2004 for availing inadmissible credit. Penalty under Rule 15 was also proposed. 6. The Appellant replied to the aforesaid notice on taking the following points: • Prior to 01-04-2011, the term "setting up" was expressly mentioned in the definition of "input services" and credit amount....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ider 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. 8.. We observe that the aforesaid definition has three limbs- (1) 'means clause' (2) 'includes clause' (3) excludes clause. It is seen that the credit in dispute, which was availed during the relevant period, were inter alia used for setting up of the plant. These input services are directly linked to the manufacture of the final product in as much as without availing the aforesaid services, the Appellant could not have set up the factory for manufacture of the goods. Hence, the input services utilized for setting up of a factor are covered within the ambit of 'means clause' Le service "used by a manufacturer whether directly or indirectly in or in relation to the manufacture of the fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er notes of the Fourth Schedule as amounting to manufacturer; or iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labeling or re-labelling of containers including the declaration or alteration of retail sale price on Excise Appeal No. 76189 of 2018 6 it or adoption of any other treatment on the goods to render the product marketable to the consumer, the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account. 20. Thus, the term 'manufacture' itself is very wide and includes anything incidental or ancillary to manufacturer. 21. For a service to qualify as 'input service' under CENVAT Credit Rules, 2004 post 2011, the service in question need not be covered even by the very wide definition of manufacturer under section 2(f) of the Central Excise Act. Any service which is used not only in manufacture but also in relation to' manufacture will also qualify as inp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....P is to load the coal into the railway wagons in an automated manner after the coal is crushed into the desired size. It is not in dispute that the service used by the appellant is for modernization of the coal loading process. The definition of input service specifically includes services received by a manufacturer for modernization of a factory. We have also perused the decision of the Tribunal in the case of Pepsico India Holdings (P) Ltd., (Supra) relied upon by the appellant. The Tribunal has observed that without setting up of the factory, there cannot be any manufacture and the mere fact that the words 'setting up of factory" has not been retained in the definition of input services post 01.04.2011, the same will not mean that the benefit of credit has been taken away by the legislature. The relevant portion of the decision is reproduced below....... 7. We thus find that services used for setting up of the factory even after 01.04.2011 would be eligible for credit." 10. We observe that similar position has also been held in the following decisions: *Jindal Steel and Power Ltd. Vs. Commissioner of Central Tax, Rourkela vide Final order ....