2024 (10) TMI 1396 - AT - Central Excise

CENVAT Credit - input service or not - denial on the ground that expression Setting up has been deleted from the inclusive clause of the definition w.e.f. 01/04/2011 and since no goods were manufactured or removed prior to 24/11/2015, the impugned services do not qualify to be input service - HELD THAT - From the definition of Input Service, it is clear that except the services mentioned in the exclusion clause all the services which are used in or in relation to the manufacture of final product and clearance of goods upto the place of removal are admissible input service. As regard the use of service, there is no dispute that those services were used in or in relation to the manufacture of the final product. As regard the contention of the revenue that setting up of factory has been removed from the inclusion clause, in our view the removal of from setting up of factory will not make any difference because the inclusive portion is not additional service but it is only clarificatory out of all the services covered in main clause. Therefore, even if it is removed from the inclusion clause so long it is used in or in relation to the manufacture of final product, all the services are admissible input service. On perusal of the exclusion clause of the definition, it is found that none of the services which are subject matter in the present appeal is falling in the exclusion clause. Therefore, there are no hesitation to hold that all the services are admissible input service and Cenvat credit is admissible. The impugned order is set aside - appeal allowed.

Summary

Issues:
Denial of Cenvat credit on various services related to the setting up of a factory.

Analysis:
The case involved a dispute regarding the denial of Cenvat credit on various services used in setting up a factory by M/s Navin Fluorine International Ltd. The appellant had availed credit on services like consulting engineer service, consultancy service, insurance, erection, commissioning, and installation service, among others, totaling Rs. 1,92,11,923/-. The department issued a show-cause notice based on an EA-2000 audit, denying the credit on the grounds that the term "setting up" was deleted from the definition of input service and no goods were manufactured or removed before a specific date. The Additional Commissioner confirmed the demand, imposing a penalty, which was upheld by the Commissioner (Appeals), leading to the present appeal.

The appellant argued that during the relevant period, the "setting up of factory" was not explicitly included or excluded from the definition of input service. They contended that the lower authority wrongly denied the credit, citing various judgments in support of their case. The appellant emphasized that they did not avail credit on construction services, and the services in question were not excluded from availing Cenvat credit.

Upon considering the submissions, the Tribunal analyzed the definition of input service post-amendments in the Cenvat Credit Rules, 2004. The Tribunal noted that all services used in or in relation to the manufacture of the final product and clearance of goods were admissible input services, except those listed in the exclusion clause. The Tribunal clarified that the removal of "setting up of factory" from the inclusion clause did not impact the admissibility of services as long as they were used in or in relation to the manufacture of the final product. None of the services in question fell within the exclusion clause, leading the Tribunal to hold that all services were admissible input services eligible for Cenvat credit. The Tribunal relied on the judgments cited by the appellant to support their decision.

Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The judgment was pronounced in open court on 25.10.2024.