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2021 (8) TMI 872 - AT - Central ExciseCENVAT Credit - input services - services of decline excavation, blasting, sealing and mucking, utilized for mine development at Kayad captive mines - interpretation of statute - scope of the means clause of rule 2(l) of the Credit Rules - situation pre 01.04.2011 and post 01.04.2011 - directions contained in the orders passed by the Tribunal were complied with or not - scope of SCN - HELD THAT - There is no manner of doubt that the order passed by the Commissioner adjudicating the first show cause notice is beyond the scope of the remand order. In regard to the subsequent show cause notices dated 28.10.2015 and 31.03.2016 for the period from October 2014 to September 2015, it is seen that the show cause notices were issued on a ground different from that contained in the first show cause notice. The show cause notices mention that the services were in relation to setting up , of mines, which service stood omitted w.e.f. 01.04.2011 from the inclusive clause of the definition of input service under rule 2(l) of the Credit Rules. They also mention that the services were in relation to construction and execution of a works contract of a building or a civil structure , which service was excluded under rule 2(l)(A) of the Credit Rules. The Tribunal in the order dated 17.11.2017, after making reference to the order dated 14.08.2017 earlier passed by the Tribunal in Excise Appeal No. 51849 of 2015, issued the same direction to the Adjudicating Authority to take a fresh decision after examining the nexus between the services and the final product of the appellant. The Department did not file any appeal against this order dated 17.11.2017 of the Tribunal and so the order passed by the Tribunal attained finality. The Commissioner was, therefore, required to examine only this limited issue on remand, but as the order would indicate, the Commissioner denied CENVAT credit observing that the work was basically of development of a civil structure of mining area by way of construction of decline/ramp and the same would merit classification as construction services , which services had been excluded under rule 2(l)(A) of the Credit Rules w.e.f. 01.04.2011. The Commissioner, therefore, in regard to the subsequent two show cause notices also went beyond the remand order. There is no hesitation in holding that the order dated 25.05.2018 passed by the Commissioner has travelled beyond the scope of the remand orders passed by the Tribunal on 14.08.2017 and 17.11.2017 and, therefore, cannot be sustained - when the services received by the appellant are covered within the means clause of the definition of input service , the appellant was justified in availing CENVAT credit on various services utilized for mine development at Khayad captive mines. The Commissioner was, therefore, not justified in examining the includes part or excludes part of the definition of input service when it had been contended on behalf of the appellant that the services utilized for mine development would be input service under the means clause of the definition of input service - Appeal allowed.
Issues Involved:
1. Denial of input service credit on various services utilized for mine development at Kayad captive mines. 2. Examination of whether the Commissioner’s order went beyond the directions issued by the Tribunal in remand orders. 3. Determination of whether the services in question qualify as 'input service' under the CENVAT Credit Rules, 2004. Issue-wise Detailed Analysis: 1. Denial of Input Service Credit: The core issue revolves around the denial of input service credit on services such as decline excavation, blasting, sealing, and mucking utilized for mine development at Kayad captive mines. The Commissioner disallowed the input CENVAT credit and ordered recovery under rule 14 of the CENVAT Credit Rules, 2004, with interest and penalty. 2. Examination of Tribunal’s Remand Directions: The appellant contended that the Commissioner’s order dated 25.05.2018 exceeded the Tribunal's remand directions, which were to examine the nexus between the services and the final product. The Tribunal had previously remanded the case to the Adjudicating Authority to specifically examine this nexus. The Commissioner, however, denied CENVAT credit on different grounds, such as the services being related to construction, development, and setting up of Kayad Mines, which were excluded from the definition of 'input service' post-01.04.2011. 3. Definition of 'Input Service': The Tribunal examined the definition of 'input service' under rule 2(l) of the Credit Rules as it stood prior to 01.04.2011, from 01.04.2011 to 30.06.2012, and w.e.f. 01.07.2012. The 'means' part of the definition remained unchanged, encompassing services used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products. The 'includes' and 'excludes' parts underwent changes, particularly excluding services related to construction and setting up of mines post-01.04.2011. Tribunal’s Findings: 1. Beyond Remand Directions: The Tribunal found that the Commissioner’s order dated 25.05.2018 went beyond the remand directions issued by the Tribunal. The remand was for examining the nexus between the services and the final product, not for re-evaluating whether the services fell under the 'includes' or 'excludes' parts of the definition of 'input service'. The Commissioner’s order was deemed to have exceeded the scope of the remand. 2. Beyond Show Cause Notice: The Tribunal also noted that the initial show cause notice dated 01.10.2013 alleged inadmissibility of CENVAT credit because services were received outside the factory premises. However, the Commissioner’s order denied credit on the grounds that the services were related to construction, which was beyond the scope of the original show cause notice. 3. Applicability of 'Means' Clause: The Tribunal emphasized that the 'means' clause of the definition of 'input service' is broad, covering services used directly or indirectly in relation to the manufacture of final products. The Tribunal referenced the decision in Pepsico India Holdings, which held that services used in setting up a plant are covered under the 'means' clause even if excluded from the 'includes' part. Thus, services utilized for mine development at Kayad captive mines qualified as 'input service'. Conclusion: The Tribunal set aside the Commissioner’s order dated 25.05.2018, allowing the appeal and confirming that the appellant was justified in availing CENVAT credit on the input services utilized for mine development at Kayad captive mines. The appeal was allowed, and the order was pronounced on 19.08.2021.
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