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2019 (12) TMI 614 - AT - Central ExciseCENVAT Credit - input services - erection, commissioning and installation services - consultancy service - site supervision in connection with the setting up of integrated steel plant services - HELD THAT - The appellant is engaged in the manufacture of sponge iron, MS billets and other iron and steel items falling under Chapter 72 of the CETA, 1985. Appellant is already having a plant for manufacture of sponge iron but they are setting up a integrated steel plant within the same premises and for that setting up, they have availed various input services provided by M/s. Mecon Ltd. who are engaged in consultancy for detailed engineering and erection, commissioning and installation. The impugned services for which CENVAT credit has been availed by the appellant do not fall in the exclusion clause as provided under Rule 2(l). Further, the services availed in the present case is relating to engineering, design, erection and commissioning, installation and not related to civil construction or not related to works contract service used for laying foundation for support of capital goods. Credit allowed - appeal allowed on merits, the question of limitation not considered - decided in favor of appellant.
Issues involved:
- Denial of CENVAT credit on input services related to setting up an integrated steel plant. - Interpretation of Rule 2(l) of CENVAT Credit Rules, 2004. - Applicability of exclusion clause to input services. - Bar on limitation for demanding service tax credit. Analysis: Issue 1: Denial of CENVAT credit on input services related to setting up an integrated steel plant The appellant, engaged in manufacturing sponge iron and steel products, availed cenvat credit on services like erection, commissioning, and installation for setting up an integrated steel plant. The authorities denied the credit stating these services are excluded from the definition of input service post 01/04/2011. The appellant argued that these services qualify as input services under Rule 2(l) as they are directly or indirectly used in or in relation to the manufacture of final products. The Tribunal examined the nature of services availed and concluded that they were not related to civil construction or works contract services for laying foundations. The Tribunal referenced previous decisions to support the appellant's claim that the services were eligible for credit even after the amendment in Rule 2(l). Issue 2: Interpretation of Rule 2(l) of CENVAT Credit Rules, 2004 The Tribunal analyzed Rule 2(l) which defines 'input service' as any service used in or in relation to the manufacture of final products. The appellant contended that the impugned services fell within this definition and were not excluded under the rule. The Tribunal agreed with this interpretation and emphasized the broad scope of 'input service' encompassing all services directly or indirectly used in the manufacturing process unless falling under the exclusion category. Issue 3: Applicability of exclusion clause to input services The appellant argued that the impugned services did not fall under the exclusion clause of Rule 2(l) and cited precedents to support their claim. The Tribunal concurred with this argument, highlighting that the services in question were related to engineering, design, erection, and commissioning, not falling under the excluded categories. The Tribunal referenced specific cases to reinforce the admissibility of CENVAT credit on such services used directly or indirectly in the manufacturing process. Issue 4: Bar on limitation for demanding service tax credit The appellant contended that the demand for service tax credit was barred by limitation due to regular audits and timely disclosure in ER1 returns. The Tribunal, after considering both parties' submissions and reviewing the records, found in favor of the appellant, allowing the appeal on merits and setting aside the impugned order. The Tribunal did not delve into the limitation issue since the appeal was allowed on its merits. In conclusion, the Tribunal ruled in favor of the appellant, holding that the denial of CENVAT credit on the input services related to setting up the integrated steel plant was not sustainable in law. The decision was based on the interpretation of Rule 2(l) and the exclusion clause, supported by relevant precedents, leading to the allowance of the appeal with consequential relief.
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