TaxTMI 
TaxTMI 
2023 (8) TMI 1674
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.... penalty. The said Notice was adjudicated by the Principal Commissioner vide Order-in-Original dated 27.11.2019, wherein the adjudicating Authority has confirmed the recovery of CENVAT credit proposed in the Notice along with interest. Penalty equivalent to the irregular credit proposed for recovery has also been imposed under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC(1) of the Act. Aggrieved against the impugned order, the Appellant has filed the present appeal. 2. In their grounds of appeal, the Appellant submitted that out of the total disputed CENVAT Credit amounting to Rs. 87,94,31,016/-, credit amounting to Rs. 16,47,05,886/- pertains to operational cost, which was inadvertently booked under project related cost. Hence, credit pertaining to project related cost was incorrectly booked as Rs. 87,94,31,016/- instead of Rs. 70,48,38,401/- (Rs. 87,94,31,016 - Rs. 16,47,05,886/-). Though the aforesaid fact was brought to the notice of the department during pre-SCN consultation, the Notice dated 24.05.2018, was issued by Ld. Commissioner, GST & Central Excise, Bhubaneswar, ignoring their claim. 2.1 The said Notice was issued on the ground that credit relat....
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....ry. 2.5. Identical question in respect of eligibility of CENVAT credit of the service tax paid towards setting up of plant came up for consideration before this Hon'ble Tribunal in the case of Pepsico India Holdings Pvt. Ltd. v. CCT, Tirupati, 2021 (7) TMI 1094 - CESTAT HYDERABAD, wherein it has been observed that '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 (l) (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'. 2.6. The CESTAT, Kolkata in the case of M/s. Bharat Coking Coal Ltd. v. CCE & ST, Ranchi 2021 (10) TMI 383-CESTAT Kolkata, following the ratio laid down in the case of Pepsico India (supra) held as follows: "6. The issue before us is whether credit is available on Coal Handing Plant (CHP), which has been set up by the appellant for evacuation of coal from its mining....
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....s have a direct nexus with the manufacture of final goods, therefore, such services are covered within the ambit of 'means' clause of the definition of' input service' and therefore, even if the word 'setting up' is specifically excluded w.e.f. 01.04.2011 from the includes clause of the definition, it would still qualify as an input service as per Rule 2(l) of CCR, 2004. 2.9. In light of the aforesaid decisions settled in favour of the Appellant, they submitted that CENVAT credit on the subject input services has been correctly availed by them and the impugned order passed by the Ld. Principal Commissioner is not sustainable and is liable to be set aside. 3. The Ld. A.R reiterated the findings of the Adjudicating Authority and contended that w.e.f. 01.04.2011 the words 'setting up of the factory' has been specifically omitted from the 'includes' part of the definition vide Notification No. 03/2011 dated 01.03.2011. Hence, the Appellant are not eligible for the credit. Accordingly, he supported the impugned order. 4. Heard both sides and perused the appeal records. 5. We observe that the Appellant has availed CENVAT Credit of Rs. 87,94,31,016/- during the period May 2016....
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....s 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' i.e. service "used by a manufacturer whether directly or indirectly in or in relation to the manufacture of the final products". Since the subject input services are covered in the 'main clause' of the definition of input service, unless it is specifically excluded under the excludes clause of the definition, the Appellant is entitled to CENVAT Credit on the subject input services used in setting up of the factory. This view has been held by the Tribunal in the case of Pepsico India Holdings Pvt. Ltd., Vs. CCT, Tirupati, 2021 (7) TMI 1094-CESTAT Hyderabad. The relevant part of the decision is extracted below: 16. We find that the definition of 'input service prior to 1.04.2011 had two parts- a ma....
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....tion 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 input service. The scope of input service is further enlarged with the expression whether directly or indirectly used in the definition of input service. Thus, there are: a) Actual manufacture; 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(I) (ii) as applicable post 1.4.2011. Although setting up the factory is not manufacture in itself, it is an activity ....
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....ame 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 eve 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 No. 75613/2023 dated 08.06.2023. * Shell India Pvt. Ltd. Vs. Commissioner of Central Tax, Bangalore North 2021-VIL-820-CESTAT-BLR-ST maintained in 2023-VIL-01-KAR-ST. *Reliance Corporate IT Park Ltd, Vs. Commissioner of Central Excise Thane-II 2023-VIL-136-CESTAT-Mum-ST. * Hindustan Zink Ltd., Vs. Commissioner of CGST, Excise & Customs, Udaipur 2021 (8) TMI 872-CESTAT New Delhi. * Kellogs India Pvt. Ltd., Vs. CCT, Tirupathi GST, 2020 (7) TMI 414 -CESTAT Hyderabad. * CCE, Kolkata Vs. Texmaco UGL Rail, 2019 (7) TMI 1651-CESTAT Kolkata. * Hindalco Industries Ltd., Vs. CGST, Jabalpur, 2019 (5) TMI 1620-CESTAT New Delhi. ....