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2023 (5) TMI 718 - AT - Central ExciseCENVAT Credit - input services - expansion activities - Department took a stand that it amounts to setting of unit and taking ground that the words setting up have been excluded in the definition of the inputs under Rule 2 (l) of Cenvat Credit Rules, 2004 - HELD THAT - It is seen that in the case of M/S MANGALAM CEMENT LIMITED VERSUS COMMISSIONER, CENTRAL GOODS, EXCISE SERVICE TAX, UDAIPUR 2023 (4) TMI 601 - CESTAT NEW DELHI , the issue was identical and the Tribunal has held as The services so utilized for setting up of the factory which were availed prior to the commencement of production shall fall within the means clause of the definition of input service , which has been held to be wide enough to allow cenvat credit of services used in or in relation to manufacture whether directly or indirectly. Appeal allowed.
Issues:
The main issue in the present case is whether the Appellant rightly availed the Cenvat Credit on input services used by them in connection with setting up of their new unit which has been deleted from the inclusion part of section 2(l) post amendment of the definition of 'input service', w.e.f. 01.04.2011. Comprehensive Details: The Appellant, a manufacturer of various gases, established further facilities in 2014 and took Cenvat Credit on 'input services' for expansion activities. The Department issued a Show Cause Notice demanding Rs.16,88,221, alleging that taking credit amounted to setting up a unit, excluded under Rule 2(l) of Cenvat Credit Rules, 2004. Lower Authorities confirmed the demand. The Appellant appealed to the Tribunal. The Advocate for the Appellant argued that they correctly availed the credit for input services used in expanding their unit, not for setting it up. Citing a case law, he contended that the Tribunal has consistently allowed such credits for services used in expansion and construction within an existing unit. The Appellant sought allowance of the Appeal. The Authorized Representative justified the Lower Authorities' decision and confirmed the demands. Upon hearing both sides, the Tribunal noted a previous case involving a similar issue. The Tribunal had held that availing credit for services used in setting up a new unit post-amendment was not admissible. However, various Tribunal decisions favored the assessee's eligibility for such credits post-amendment, citing specific cases. Referring to earlier Tribunal decisions, the Tribunal emphasized that services used in setting up a factory, though no longer specifically included post-amendment, were covered under the main part of the definition of 'input service'. The Tribunal clarified that services indirectly related to manufacture, including setting up a factory, qualified as input services post-amendment. The Tribunal found a direct nexus between the manufacture of final products and services used for setting up the new unit, rejecting the revenue's demand to deny Cenvat credit. Consequently, interest and penalty were no longer applicable. Given the precedents and findings, the Tribunal allowed the Appeal with any consequential relief, if applicable.
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