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2019 (5) TMI 587 - AT - Central ExciseCENVAT Credit - input services - fabrication of steel items and other services used for setting up of the factory - Rule 2(l) of CCR, 2004, as per amended Rules w.e.f. 01.04.2012 - deletion of word setting up from the inclusive part of input services definition w.e.f. 01.04.2011 - HELD THAT - In the present case, the impugned services have been used not for initial setting up of the plant but they have been used in fabrication, erection and installation services of equipment like Hoppers, Chutes, Ducts and Air Tubes and not used for setting up of a factory or office building or for laying foundation. The definition of input service even after amendment from 01.04.2011 includes any service used by the manufacturers directly or indirectly and in or in relation to manufacture of final product - Further, perusal of the invoices placed on record clearly shows that all the services have been used for fabrication and erection of various equipment and machinery and has not been used for setting up of the plant or civil structure. In the case of M/S. DEEPAK FERTILIZERS AND PETROCHEMICALS CORPORATION LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE 2013 (4) TMI 44 - BOMBAY HIGH COURT , the Hon ble High Court of Bombay held that the expression directly and indirectly and in or in relation to manufacture of final products used in the definition under Rule 2(l) of CCR, 2004 has broader meaning. Credit allowed - appeal allowed - decided in favor of appellant.
Issues:
- Denial of CENVAT credit on input services for fabrication and erection of equipment. - Interpretation of the definition of 'input service' under Rule 2(l) of CCR, 2004. - Applicability of the definition of 'input service' post-amendment from 01.04.2011. - Justification for availing CENVAT credit on services used in fabrication and erection. - Comparison with relevant legal precedents to support the appellant's claim. Analysis: The appeal challenged the order of the Commissioner (Appeals) denying CENVAT credit of &8377; 2,08,231/- for input services used in fabrication and erection of equipment, contending that these services qualify as 'input services' under Rule 2(l) of CCR, 2004. The appellant argued that the impugned order failed to appreciate the broad scope of 'input service' and incorrectly excluded services related to fabrication and erection. The appellant relied on legal precedents like Deepak Fertilizers & Petrochemicals Corpn. Ltd. v. CCE, Belapur, to support their claim that services used 'directly or indirectly' and 'in or in relation to' manufacturing final products are eligible for CENVAT credit. The AR defended the impugned order, opposing the appellant's interpretation of 'input service' and justifying the denial of CENVAT credit for services used in fabrication and erection. However, after considering both parties' submissions and reviewing the records, the Tribunal found that the impugned services were not related to the initial setting up of the plant but were used in fabrication and erection of specific equipment. The Tribunal noted that the definition of 'input service' post-amendment from 01.04.2011 includes services used 'directly or indirectly' and 'in or in relation to' manufacturing final products. Moreover, the Tribunal referenced the decision in Deepak Fertilizers & Petrochemicals case, emphasizing the broad interpretation of 'input service' to encompass services utilized in or in relation to the manufacture of final products. The Tribunal concluded that the impugned order was legally unsustainable, as the services in question were integral to the manufacturing process and fell within the ambit of 'input services.' Consequently, the Tribunal set aside the impugned order and allowed the appeal of the appellant, granting them the CENVAT credit of &8377; 2,08,231/-. In summary, the judgment clarified the scope of 'input service' under Rule 2(l) of CCR, 2004, post-amendment from 01.04.2011, and highlighted the applicability of legal precedents in determining the eligibility of CENVAT credit for services used in fabrication and erection activities related to manufacturing processes.
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