2023 (10) TMI 287 - AT - Central Excise

CENVAT Credit - input services used for setting up of plant and factory after 01.04.2011 - denial on the ground that input service used for setting up of plant/factory is not entitled in terms of Rule 2(l) of the Cenvat Credit Rules, 2004. HELD THAT - The said issue has been dealt by this Tribunal in the case of Aditya Aluminium 2023 (9) TMI 55 - CESTAT KOLKATA , wherein this Tribunal has observed that the subject input services have a direct nexus with the manufacture of finished goods in the means clause of the definition of input services. Accordingly we hold that even if the word setting up of a factory has been specifically excluded from the definition w.e.f.01.04.2011, such services are covered within the ambit of main clause of the definition. Hence, it would still qualify as an input service as per Rule 1(I) of CCR, 2004. As the issue has already been decided and no more res integra, therefore, the input service namely erection, commissioning and installation for setting up of new plant have a direct nexus with the manufacturing activity of the appellant, therefore, the said service duly qualifies as input service in terms of Rule 2(l) of Cenvat Credit Rules, 2004, therefore, the appellant is entitled to take cenvat credit on the services in question for setting up of plant even after amendment w.e.f. 01.04.2011. There are no merit in the impugned order, the same is set aside - appeal allowed.

Summary

Issues Involved:
1. Entitlement to Cenvat credit on input services used for setting up of plant/factory after 01.04.2011.
2. Interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004.

Summary:

1. Entitlement to Cenvat credit on input services used for setting up of plant/factory after 01.04.2011:
The appellant challenged the denial of Cenvat credit on input services used for setting up a plant/factory, arguing that these services are directly related to the manufacture of their final product and thus qualify as input services under Rule 2(l) of the Cenvat Credit Rules, 2004. The appellant cited previous Tribunal decisions, including Aditya Aluminium and Jindal Steel & Power Ltd., to support their claim that services used in relation to the manufacture of final products are admissible for credit.

2. Interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004:
The Tribunal examined the definition of "input service" post-amendment on 01.04.2011, noting that it includes services used directly or indirectly in or in relation to the manufacture of final products. The Tribunal reiterated that services used for setting up a factory, although omitted from the inclusive part of the definition post-01.04.2011, are still covered under the main clause of the definition. This interpretation is consistent with previous rulings in similar cases, such as Pepsico India Holdings Pvt. Ltd. and Bharat Coking Coal Ltd., which held that setting up a factory is an activity directly related to manufacture and thus qualifies for Cenvat credit.

The Tribunal concluded that the input services for erection, commissioning, and installation used in setting up the new plant have a direct nexus with the manufacturing activity, thereby qualifying as input services under Rule 2(l) of the Cenvat Credit Rules, 2004. Consequently, the impugned order denying the Cenvat credit was set aside, and the appeal was allowed with consequential relief.