2019 (2) TMI 1292 - AT - Central Excise

CENVAT Credit - input services - change of land use - topographical survey - consultancy of environmental issue - Held that - Although the services of setting up of a new factory has been excluded from inclusive part of the definition and particularly excluded the service portion of execution of works contract and construction services which includes A construction execution of works construction building for civil construction or lying the foundation or making the structure for support of capital goods. It does not mean that the other services used for setting up for a new factory, the credit is not available. The service in question has been used by the appellant for setting up of a factory and without setting up of the factory the appellant is not able to manufacture their final product. In that circumstances, the services used by the appellant are the part of the means part of the definition of input service. Moreover these services have not been excluded from the definition of input service specifically. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is entitled to avail Cenvat Credit on services like change of land use, topographical survey, and consultancy of environmental issues for setting up a factory post-amendment in Rule 2(l) of Cenvat Credit Rules 2004 from 01.04.2011 or not?

Analysis:
The case revolves around the appellant's claim for Cenvat credit on services used for establishing a cement factory post-amendment in Rule 2(l) of Cenvat Credit Rules 2004 from 01.04.2011. The appellant contends that the services were essential for manufacturing their final product and clearance, thereby justifying the Cenvat credit claim. The appellant's argument is supported by a precedent from the Honorable High Court of Punjab & Haryana.

The respondent, however, opposes the claim post-2011 amendment, citing that setting up a new factory is excluded from the definition of input services under Rule 2(l). The respondent relies on various tribunal decisions to support their stance.

Upon consideration, the Tribunal delves into the amended Rule 2(l) of Cenvat Credit Rules, 2004, highlighting the distinction between the 'means' and 'inclusive' parts of the definition of input services. Despite excluding services related to the execution of works contracts and construction, the Tribunal finds that services used for setting up a new factory are not explicitly excluded. Referring to the Honorable Punjab & Haryana High Court's decision, the Tribunal emphasizes that the services are integral to the manufacturing process and fall under the 'means' part of the definition.

Disagreeing with the respondent's arguments and the tribunal decisions presented, the Tribunal upholds the appellant's entitlement to Cenvat credit based on the 'means' part of the definition. The Tribunal emphasizes the importance of following the jurisdictional High Court's decision, further supporting the appellant's claim for Cenvat credit on the mentioned services.

Consequently, the impugned order denying the Cenvat credit is set aside, and the appeal is allowed, granting the appellant the relief sought.

This detailed analysis of the judgment showcases the Tribunal's thorough consideration of the legal provisions, precedents, and arguments presented by both parties before reaching a decision in favor of the appellant's entitlement to Cenvat credit for the specified services used in setting up the factory.