2018 (9) TMI 633 - AT - Central Excise

CENVAT Credit - input/input services - manufacture of Cement and Cement Clinker - Railway track, material & works contract services etc. - Consultancy and Manpower Supply Services used in the laying of Railway Lines - Held that - The definition of capital goods as well as inputs mandate the usage of goods within the factory. It has been held in a catena of judgement that where pipelines, rope-ways and other material handling equipment and their parts are partially located within factory and partially outside, then the portion which is outside the factory has to be treated as an extension of the portion which is inside the factory. Accordingly, the condition of used in factory gets satisfied and the Cenvat Credit is admissible - the railway track laid by the Appellant (which connects the railway siding outside the factory with the siding inside the factory) shall have to be treated to have satisfied the condition of used in the factory . The issue about works contract services availed for laying down the Railway line is also no more res-integra in view of the judgement in the case of The India Cement Ltd. v. CCE, Chennai-I 2018 (6) TMI 581 - CESTAT CHENNAI , wherein it was held that The laying of railway tracks does not fit into sub-clause (a) or (b) of exclusion Part (A) in the definition of input service. Thus the disallowance of credit, alleging that these services are excluded from the definition, is without any legal basis. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of Cenvat Credit on Railway track, material & works contract services
- Consultancy and Manpower Supply Services used in the laying of Railway Lines

Analysis:
- The appellant, engaged in the manufacture of Cement and Cement Clinker, appealed against the Order-in-Appeal upholding the denial of Cenvat Credit on various inputs used in laying the railway track within the factory premises. The dispute involved the usage of capital goods in the factory and the Service Tax paid for services consumed by the appellant.
- The Tribunal considered the definition of 'capital goods' and 'inputs' requiring usage within the factory premises. Referring to past judgments, it concluded that the railway track connecting the railway siding outside and inside the factory qualifies as 'used in the factory.' Citing the case of Birla Corporation Ltd. v. CCE, it established the railway track as part of the plant and machinery aiding in the movement of inputs and finished goods.
- The Tribunal also addressed the issue of works contract services for laying down the railway line. It relied on the judgment in the case of The India Cement Ltd. v. CCE, Chennai, which clarified that not all works contract services are excluded from the definition of input services. Since the services were related to laying railway tracks, considered capital goods, they were deemed eligible for Cenvat Credit. This decision was supported by the judgment in Ultratech Cement Ltd. vs. CCE, Nagpur, further solidifying the admissibility of Cenvat Credit in such cases.
- In conclusion, the Tribunal allowed the appeal, emphasizing the admissibility of Cenvat Credit on the works contract services for laying railway lines and the railway track within the factory premises. The judgment was dictated and pronounced in the open court, resolving the issues raised by the appellant effectively.