2024 (6) TMI 679 - AT - Central Excise

CENVAT Credit - input services or not - phrase setting up of the factory was specifically excluded in amended definition of input services or not - HELD THAT - Since, the disputed services were not specifically falling under the excluded category and were used in relation to manufacture of the final products, in our considered view, denial of Cenvat Credit of service tax paid on those services cannot be sustained. We find that the issue arising out of the present dispute has been adequately dealt with by the Co-ordinate Bench of This Tribunal in the case of PEPSICO INDIA HOLDINGS (PVT.) LTD. VERSUS COMMISSIONER OF CENTRAL TAX, TIRUPATI 2021 (7) TMI 1094 - CESTAT HYDERABAD where it was held that ' Without setting up the factory, there cannot be any manufacture. Services used in setting up the factory are, therefore, unambiguously covered as input services under Rule 2 (l) (ii) of the CENVAT Credit Rules, 2004 as they stood during the relevant period (post 1.4.2011). The mere fact that it is again not mentioned in the inclusive part of the definition makes no difference. Once it is covered in the main part of the definition of input service, unless it is specifically excluded under the exclusion part of the definition, the appellant is entitled to CENVAT credit on the input services used. '. There are no merits in the impugned order, insofar as it has denied the Cenvat Credit and confirmed the adjudged demands on the appellants - the impugned order is set aside - appeal allowed in favor of appellant.

Summary

Issues involved: Denial of Cenvat Credit of service tax paid on various services.

Comprehensive Details:

Issue 1: Denial of Cenvat Credit
The disputed services include Consultancy Service, Hotel Service, Erection, Commissioning and Installation, Technical Testing and Inspection, and others. The adjudicating authority denied the Cenvat Credit post-amendment of the definition of input service. The amendment replaced "setting up of the factory" with "modernization, renovation or repairs of a factory" in the definition. Certain excluded categories of services were also incorporated, such as services in the execution of works contract and construction services.

Issue 2: Interpretation of Input Service
Upon considering the disputed services, it was found that they did not fall under the excluded category. As the services were used in relation to the manufacture of final products, the denial of Cenvat Credit was deemed unsustainable. Reference was made to a Co-ordinate Bench decision which emphasized that services used in setting up the factory are covered as 'input services' under the CENVAT Credit Rules. The Tribunal concluded that the impugned order denying the Cenvat Credit and confirming the demands on the appellants lacked merit. Consequently, the order was set aside, and the appeal was allowed in favor of the appellant.