TaxTMI 
TaxTMI 
2026 (7) TMI 1049
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....s and input services from FY 2012-13 onwards. Being duly eligible, the Appellant, inter alia, availed Cenvat credit in respect of input services used for setting up of the said plant from January 2013. However, no Cenvat credit of works contract services related to construction of building or civil structure was availed by it. The Appellant thereafter commenced commercial production at the factory on 21.07.2014 and continued to avail credit of tax paid on input services directly related to the manufacture of final dutiable goods. 1.2. An audit was conducted on the premises of the Appellant on 18.07.2015, 20.07.2015 and 29.07.2015 for the period November 2012 to March 2015. During audit, the Department observed that the Appellant had availed Cenvat credit on services which were procured towards setting up of the factory. It was alleged that such services do not fall within the definition of 'input services' under Rule 2(l) of the Rules and consequently, the credit had been wrongly availed by them. Two audit memos were issued to the Appellant for the period January 2013 to March 2015, alleging that they had irregularly availed and utilised Cenvat credit of input services t....
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....07,979/- being in excess was dropped. The impugned demand was confirmed on the basis of the following finding: i. When the single one phrase "setting up" has been deleted, the intent of the law maker is very much clear to not allow the availment of input service pertaining to setting up. Therefore, what has been consciously deleted by the legislature deemed to have been disallowed from the effective date. ii. There is no legal foundation of the Appellant's contention that only services of actual construction are excluded from the definition of input services and other services received in relation to construction such as 'manpower service' and 'commissioning and installation agency services' shall not stand excluded. iii. In so far as the services received pursuant to commercial production, the Ld. Commissioner observed that the Appellant has been unable to prove without reasonable doubt that the services were received by them in relation to manufacture and not in relation to 'setting up' of their factory. iv. That setting up of a factory is a long process which may continue after commencement of manufacture also and t....
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..... reiterated the findings in the impugned order. 4. Heard both sides and perused the appeal documents. 5. We find that the Appellant had availed Cenvat credit on services which were procured towards 'setting up' of the factory. It was alleged that such services do not fall within the definition of 'input services' under Rule 2(l) of the Rules after the word 'setting up' has been specifically excluded from the definition of 'input services' w.e.f. 01.04.2011. Accordingly, it is alleged that the Appellant has wrongly availed the cenvat credit. 5.1. Thus, it is relevant to examine the definition of 'input service' as defined under Rule 2(l) w.e.f. 01.04.2011, which is reproduced 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, premises, of provider of output service or an office relating to such factor....
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....by the Appellant for 'setting up' of the plant cannot be denied. 5.3. We find that the issue involved in the present case is no longer res-integra, as an 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'. 5.4. The same view has been taken in the case of M/S Steel Authority of India Limited Versus Commissioner of CGST & Central Excise, Durgapur -2026 (3) TMI 741 - CESTAT KOLKATA, wherein this Tribunal has held that Rule 2(l) (post 01.....