2023 (1) TMI 506 - AT - Central Excise

Availability of Cenvat Credit - Input services - Management Consultancy services - Legal and Professional services of / and services used mainly in erection and commissioning, laying of foundation and making structure in support of capital goods/ machinery - rent-a-cab - hotel services - insurance services - architectural services - period 2012-14 - HELD THAT - The appellants are engaged in manufacture of steel, coils. The appellants were setting up their new plants and while setting up their new plant, the appellant availed various services. The revenue has sought to deny input credit of various services used by the appellant on the ground that the definition of input service was amended with effect from 01.04.2011 to exclude the services used for setting up of factory premises of output service provider or office relating to such factory or premises. It is seen that the definition of input service was amended with effect from 01.04.2011 - It is seen that the order of Commissioner examines the omission of words in initial setting up in the inclusive part of the definition of input service, but fails to examine the admissibility of input services credit of these services under the main part of the definition of input service. The impugned order does not examine the admissibility of Cenvat Credit of these services in the main part of the definition, but relies solely on the changes made in the inclusive part of definition - In terms of the decision in the case of Pepsico India Holdings (Pvt.) Ltd 2021 (7) TMI 1094 - CESTAT HYDERABAD , it is apparent that if the services provided in relation to setting up in unit would be covered under the main part of the definition. Unless specifically excluded by exclusion clause. It is seen that the impugned order does not examine which service would fall under which exclusion clause. The order in this regard is vague and not a speaking order. There are no option but to set aside the impugned order and remand the matter back to the original Adjudicating Authority to pass fresh order in the light of the Tribunal decisions in the case of Pepsico India Holdings (Pvt.) Ltd - Moreover, the Commissioner has expected to identify the specific exclusion clause of definition of input service under which he seeks to deny the credit of or of the service - He will also examine the cases relied by the appellant in support of its claim - matter remanded to the original Adjudicating Authority for fresh adjudication.

Summary

Issues Involved:
1. Availability of Cenvat Credit on various services.
2. Interpretation of "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004.
3. Applicability of exclusions in the definition of "input service" post amendment effective from 01.04.2011.
4. Invocation of extended period of limitation and imposition of penalties.

Detailed Analysis:

1. Availability of Cenvat Credit on Various Services:
The appellant, M/s. CSCI Steel Corporation India Pvt. Ltd., contested the denial of Cenvat Credit on services such as Management Consultancy, Legal and Professional services, Erection and Commissioning, Rent-a-cab, Hotel services, Insurance services, and Architectural services. The primary argument was that these services should be considered valid input services under Rule 2(l) of the Cenvat Credit Rules, 2004, during the period 2012-14.

2. Interpretation of "Input Service" under Rule 2(l) of the Cenvat Credit Rules, 2004:
The appellant argued that even after the amendment on 01.04.2011, which removed the term "setting up" from the inclusive part of the definition, the services used for setting up the factory should still be covered under the main part of the definition. They cited various judicial decisions supporting that services used in setting up a factory are essential for manufacturing and should qualify as input services.

3. Applicability of Exclusions in the Definition of "Input Service" Post Amendment:
The Commissioner denied the credit based on the amended definition of input service, which excluded services used for setting up factory premises. The Tribunal noted that the Commissioner failed to examine whether these services could still be considered under the main part of the definition. The Tribunal referenced the case of Pepsico India Holdings (Pvt.) Ltd., which clarified that services used in setting up a factory are covered under the main part of the definition unless specifically excluded.

The Tribunal also pointed out that the Commissioner's order was vague and did not specify which services fell under which exclusion clause. The Tribunal emphasized the need for a clear examination of each service against the specific exclusion clauses.

4. Invocation of Extended Period of Limitation and Imposition of Penalties:
The appellant argued that the demand was time-barred and that penalties should not be imposed due to the interpretational nature of the issue. They claimed that there was a bona fide belief in the eligibility of the credits, supported by multiple favorable judicial decisions. The Tribunal did not explicitly address this argument in the provided text but remanded the matter for fresh adjudication.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the original Adjudicating Authority for fresh adjudication. The Adjudicating Authority was directed to consider the Tribunal's decisions in Pepsico India Holdings (Pvt.) Ltd. and Reliance Industries Ltd., and to clearly identify the specific exclusion clauses under which the credits were being denied. The Authority was also instructed to examine the cases relied upon by the appellant in support of their claim.

Pronouncement:
The judgment was pronounced in the open Court on 11.01.2023.