2023 (1) TMI 147 - HC - Central Excise

Input Tax Credit - input services or not - input services were used for providing output services - whether the term setting up has been specifically excluded from the definition of input service with effect from 01.04.2011 vide Notification No.3/2011-CE (NT) dated 01.03.2011 - services used for setting up of New Technology Centre - HELD THAT - Sri.Harish has categorically submitted that CENVAT credit on input services on any new constructions is not claimed. This aspect has been considered by the CESTAT in paragraph-5.1 in extenso. Having heard the learned Standing Counsel for the CESTAT and the learned Advocate for assessee we find no error in the findings recorded by the CESTAT - Appeal dismissed.

Summary

Issues:
1. Whether disputed input services were used for providing output services despite the exclusion of "setting up" from the definition of input service.
2. Whether facts from the Order-In-Original were considered in allowing credit for input services used for setting up a New Technology Centre.
3. Whether the CESTAT was correct in setting aside the Order and allowing the assessee's appeal.

Analysis:
1. The appeal challenged the CESTAT's decision regarding the disputed input services used for providing output services, despite the exclusion of "setting up" from the input service definition. The Revenue argued that post-amendment, the assessee should not be entitled to CENVAT credit on fresh constructions. However, the Advocate for the assessee pointed out that the amendment allowed credit for modernization, renovation, or repairs of factory premises, as long as the service was used for providing an output service.

2. The issue of whether the facts from the Order-In-Original were considered in allowing credit for input services used for setting up a New Technology Centre was also raised. The Revenue contended that the assessee was not entitled to credit for construction while setting up the new project. However, the Advocate for the assessee clarified that no CENVAT credit on input services for new constructions was claimed, which was acknowledged by the CESTAT in detail.

3. The final issue questioned whether the CESTAT was correct in setting aside the Order and allowing the assessee's appeal. After hearing arguments from both sides, the High Court found no error in the CESTAT's findings. Consequently, the appeal was dismissed, and the questions of law were answered in favor of the assessee and against the Revenue. The High Court's decision favored the assessee, emphasizing that the CENVAT credit on input services for new constructions was not claimed, leading to the dismissal of the appeal.

This detailed analysis of the judgment highlights the legal arguments, interpretations of relevant laws, and the ultimate decision of the High Court in addressing the issues raised in the appeal.