2024 (6) TMI 681 - AT - Central Excise

CENVAT Credit of service tax paid - Input service - exclusion of phrase setting up of the factory from amended definition - Consulting Engineer Service - Plant Fabrication Erection Commissioning service - Supply of Tangible Goods service - HELD THAT - The definition of input service, prior to its amendment w.e.f. 01.04.2011 provided the phrase used in relation to setting up, modernization, renovation or repairs of a factory in the inclusive part contained therein. The said definition was amended vide Notification No.3/2011 dated 01.03.2011 (w.e.f. 01.04.2011). The effect of such amendment was that the phrase setting up of the factory was replaced with the phrase used in relation to modernization, renovation or repairs of a factory - The excluded category of services provided under Rule 2(l) ibid interalia, includes service portion in the execution of the works contract and construction services insofar as they are used for (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods . On consideration of the disputed services used/utilised by the appellants, it is found that such services were not falling under the exclusion clause provided under Rule 2(l)(A) ibid. Since, the disputed services were not specifically falling under the excluded category and were used in relation to manufacture of the final products, denial of Cenvat Credit of service tax paid on those services cannot be sustained - 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 . 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 et aside - appeal allowed.

Summary

Issues involved: Denial of Cenvat Credit of service tax paid on Consulting Engineer Service, Plant Fabrication & Erection & Commissioning, and Supply of Tangible Goods.

Summary:
The Appellate Tribunal CESTAT MUMBAI addressed the denial of Cenvat Credit of service tax paid on various services in the present dispute. The disputed services were Consulting Engineer Service, Plant Fabrication & Erection & Commissioning, and Supply of Tangible Goods. The adjudicating authority had denied the Cenvat Credit, stating that these services could not be considered as 'input service' u/s Rule 2(l) of the Cenvat Credit Rules, 2004 post 01.04.2011 due to the exclusion of the phrase "setting up" of the factory in the amended definition.

The definition of input service was amended w.e.f. 01.04.2011, replacing the phrase "setting up of the factory" with "used in relation to modernization, renovation or repairs of a factory." Certain excluded categories of services were also incorporated, including services in the execution of works contract and construction services. After considering the disputed services used by the appellants, it was found that these services were not falling under the exclusion clause provided under Rule 2(l)(A). The Tribunal referred to a previous case to support the view that services used in setting up the factory are covered as 'input services' under Rule 2(l) of the Cenvat Credit Rules, 2004.

Consequently, the Tribunal concluded that the denial of Cenvat Credit on the disputed services cannot be sustained as they were used in relation to the manufacture of final products. The impugned order denying the Cenvat Credit and confirming the demands on the appellants was set aside, and the appeal was allowed in favor of the appellant.