2020 (1) TMI 1317 - AT - Central Excise

CENVAT Credit - input services used in setting up of factory during 17-10-2012 to 29-9-2014 - It has been argued by the Learned Counsel that omission of the words setting up from the definition of the input services does not mean that the appellants are not entitled for Cenvat credit on the services used in setting up of the factory premises - Circular No. 964/07/2012-CX., dated 2-4-2012, clarified by Circular No. 966/09/2012-CX., dated 18-5-2012 - HELD THAT - The original adjudicating authority has clearly held that the services in dispute are covered by the expression used in or in relation to manufacture of final products and, therefore, even if the words setting up are deleted from the definition of input services, it makes no difference. It is also found that the impugned order does not dispute the finding of the Original Adjudicating Authority that the services are covered by the expression used in or relation to manufacture of final product . The impugned order solely relied on the omission of words setting up from the definition of input services. It is seen that the Original Adjudicating Authority had not allowed the benefit under that expression of the definition which has been challenged by Revenue. The findings of the Original Adjudicating Authority that the said services are covered by the expression used in or in relations to manufacture of final products remains undisturbed by the impugned order - the appellant remains entitled to Cenvat credit of the disputed services under the expression used in or in relation to manufacture of final products - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against Commissioner (Appeals) setting aside Order-in-Original by Assistant Commissioner, LTU (Mumbai) regarding denial of Cenvat credit on services used in setting up of factory during 17-10-2012 to 29-9-2014.

Analysis:
The appeal was filed by M/s. Supreme Industries Ltd. challenging the order of the Commissioner (Appeals) which set aside the Order-in-Original passed by the Assistant Commissioner, LTU (Mumbai). The dispute revolved around the denial of Cenvat credit on certain services utilized in setting up the factory premises between October 17, 2012, and September 29, 2014. The Revenue sought to disallow the credit based on a change in the definition of 'input services' in the Cenvat Credit Rules. However, the appellant argued that the omission of the words "setting up" from the definition did not preclude them from claiming Cenvat credit for services used in setting up the factory. The Original Adjudicating Authority had initially allowed the credit, emphasizing that services related to structural components essential for machinery would qualify for Cenvat credit. It was clarified that only services related to construction, execution of work contracts for buildings or civil structures, or specific foundation work were excluded. Circulars issued in 2012 regarding boilers were also deemed applicable to all equipment and machinery. The Order-in-Original highlighted that the services fell within the scope of "used in or in relation to manufacture of final products," irrespective of the omission of "in relation to setting up of factory" from the definition.

The learned Counsel for the appellant contended that the impugned order solely focused on the exclusion of "setting up" from the definition and failed to consider the broader aspect of "used in or in relation to manufacture of final products." The Authorized Representative for the Revenue supported the impugned order. Upon reviewing the submissions, the Member (T) found that the Original Adjudicating Authority correctly determined that the disputed services were covered by the expression "used in or in relation to manufacture of final products." Despite the omission of "setting up" from the definition of input services, this finding remained unchallenged. The impugned order's sole basis for denial was the absence of "setting up" in the definition, overlooking the crucial aspect of the services' relevance to manufacturing final products. Consequently, the Member (T) upheld the Original Adjudicating Authority's decision, affirming the appellant's entitlement to Cenvat credit for the disputed services under the expression "used in or in relation to manufacture of final products." As a result, the appeal was allowed, and the decision was pronounced in open court on January 24, 2020.