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TMI Blog2021 (8) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... the services were in relation to construction and execution of a works contract of a building or a civil structure , which service was excluded under rule 2(l)(A) of the Credit Rules. The Tribunal in the order dated 17.11.2017, after making reference to the order dated 14.08.2017 earlier passed by the Tribunal in Excise Appeal No. 51849 of 2015, issued the same direction to the Adjudicating Authority to take a fresh decision after examining the nexus between the services and the final product of the appellant. The Department did not file any appeal against this order dated 17.11.2017 of the Tribunal and so the order passed by the Tribunal attained finality. The Commissioner was, therefore, required to examine only this limited issue on remand, but as the order would indicate, the Commissioner denied CENVAT credit observing that the work was basically of development of a civil structure of mining area by way of construction of decline/ramp and the same would merit classification as construction services , which services had been excluded under rule 2(l)(A) of the Credit Rules w.e.f. 01.04.2011. The Commissioner, therefore, in regard to the subsequent two show cause notices al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal No. E/50326/2019 E/50328/2019 E/50327/2019 Order date 25.05.2018 Date of Show Cause Notices 01.10.2013 28.10.2015 31.03.2016 Period of dispute October 2012 to March 2013 October 2014 to March 2015 April 2015 to September 2015 Duty Demand ₹ 97,08,776 ₹ 4,46,13,883 ₹ 3,11,35,434 Penalty ₹ 5,00,000 ₹ 20,00,000 ₹ 15,00,000 5. The appellant is engaged in the manufacture of Zinc and Lead Concentrates falling under Chapter 26 of the First Schedule to the Central Excise Tariff Act, 1985. It availed CENVAT credit on various inputs, capital goods and input services in terms of the provisions of the Credit Rules. It has an ore concentration facility at Rampura Agucha, where mined ores (i.e. their raw material/input) containing mud/impurities are brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable in the mining area, so mobile phone was provided to the workers and staff offices. In these circumstances, it appears that the services were carried out to obtain sufficient quantity of raw material, of course outside the factory premises but within the mining area. So, these services are connected with the manufacture of the final product and prima facie eligible for CENVAT Credit. When it is so, then we set aside the impugned order and remand the case back to adjudicating authority for fresh decision after examining the nexus between the services and the final product of the appellant . Adjudicating Authority to examine the issue afresh but by providing a reasonable opportunity to the appellant. Fresh evidence may be admitted as per law. In the result, appeal filed by the appellant is allowed by way of remand. (emphasis supplied) 8. The subsequent show cause notices dated 28.10.2015 and 31.03.2016 were adjudicated by a common order dated 27.03.2017, wherein the entire demand of ₹ 4,46,13,883/- and ₹ 3,11,35,434/- respectively were confirmed with interest and penalties. 9. The appellant filed Excise Appeal No. 51295 of 2017 and Excise Appeal No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nput services w.e.f. 01.04.2011. Thus, credit is not admissible. There is no mention that input service credit is not available for services utilized outside factory. Services are related to construction, development and setting up of Kayad mines. The activities were for construction and all such activities relating to construction or execution of a works contract of a building or a civil structure have been excluded from the definition of input service w.e.f. 01.04.2011 under Rule 2(l)(a)(A). Thus, credit is not admissible. Oct 2014 to March 2015 28.10.2015 Services are in relation to 'setting up' of mines which stands omitted w.e.f. 1.04.2011 from the includes clause of input service. Further, the services are in relation to 'construction' and execution of a works contract of a building or a civil structure , which is excluded under Rule 2(l)(A) Order dated 7.03.2017 Services are in relation to 'setting up' of mines which stands omitted w.e.f. 01.04.2011 from the includes clause of input service. Further, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utput service; or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernization , renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training , computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal ; but excludes services ,- A. specified in sub-clauses (p), (zn), (zzl), (zzm), (zzq), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act (hereinafter referred as specified services), in so far as they are used for- a. construction 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, except for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re excluded w.e.f. 01.04.2011. It is also seen that the excludes part of the definition of input service was further amended w.e.f. 01.07.2012. 15. Learned Counsel for the appellant has placed emphasis on the means clause of rule 2(l) of the Credit Rules. It continued to remain the same whether before 01.04.2011 or after 01.04.2011. In this connection, learned Counsel emphasized that input service would mean any service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal. 16. To appreciate whether the impugned order has travelled beyond the directions contained in the two orders passed by the Tribunal, it would be necessary to examine the orders. 17. The show cause notice dated 01.11.2013 alleged that CENVAT credit was inadmissible as the services were received outside the factory premises. The first order dated 10.02.2015 passed by the Adjudicating Authority decided this issue in favour of the appellant by holding that CENVAT credit of input services received in the captive mines is admissible since the definition does not mention that input ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined by the Commissioner after remand by Tribunal is the bone of contention between the appellant and the respondent. 21. Learned Counsel for the appellant submitted that once the order passed by the Tribunal on 14.08.2017 remanding the case to the Commissioner had attained finality, the Commissioner could have examined only that particular issue that was remanded. Learned Authorized Representative for the Department, however, contended that the remand order was a very wide order and when the Adjudicating Authority was directed to examine the issue fresh by providing a reasonable opportunity to the appellant, it implies that all the issues were left open to be decided by the Commissioner and, therefore, it cannot be urged that the Commissioner went beyond the directions contained in the remand order. 22. This submission advanced by the learned Authorized Representative for the Department cannot be accepted. The order in its entirety has to be read and when so read, it clearly transpires that a direction was issued to the Adjudicating Authority to take a fresh decision after examining the nexus between the services and final product of the appellant. The Commissioner h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Commissioner, in the first order dated 27.03.2017, confirmed the demand. However, the Tribunal in the order dated 17.11.2017, after making reference to the order dated 14.08.2017 earlier passed by the Tribunal in Excise Appeal No. 51849 of 2015, issued the same direction to the Adjudicating Authority to take a fresh decision after examining the nexus between the services and the final product of the appellant. The Department did not file any appeal against this order dated 17.11.2017 of the Tribunal and so the order passed by the Tribunal attained finality. The Commissioner was, therefore, required to examine only this limited issue on remand, but as the order would indicate, the Commissioner denied CENVAT credit observing that the work was basically of development of a civil structure of mining area by way of construction of decline/ramp and the same would merit classification as construction services , which services had been excluded under rule 2(l)(A) of the Credit Rules w.e.f. 01.04.2011. The Commissioner, therefore, in regard to the subsequent two show cause notices also went beyond the remand order. 27. There is, therefore, no hesitation in holding that the order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d October 2012 to March 2013, therefore, deserves to be set aside for this reason also. 34. The order passed by the Commissioner denies CENVAT credit for the reason that the services were construction related services which had been excluded from the definition of input service and also for the reason that services in relation to setting up of a mine had been deleted from the definition of input service w.e.f. 01.04.2011. 35. Learned Counsel for the appellant submitted that the appellant would be eligible for CENVAT Credit on the input services in question under the means clause of the definition of input service that provides used in or in relation to the manufacture of final products . The submission is that even post the amendment in the definition of input service w.e.f. 01.04.2011, the means clause continues to remain the same. It is also the submission that means clause of the definition is very widely worded and words such as directly or indirectly and in or in relation to , further expand the scope of the definition. In this connection, reliance has been placed on the decision of the Tribunal in Pepsico India Holdings (Pvt.) Ltd. vs. Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the definition nor in the exclusive part of the definition. However, he would argue that these services were necessary to set up the plant and manufacture the goods. Thus, these services are directly connected to the manufacture of the goods and hence they are covered in the main part of the definition of the input service after 1.4.2011 and therefore credit is available even though such services were no longer specifically in the inclusive part of the definition . Such a view was taken in the case of Kellogs by this Bench and in other cases cited above. He, therefore, prays that the appeals may be allowed and the impugned orders may be set aside. 12. Learned Departmental Representative vehemently opposes these arguments and supports the impugned orders and asserts that since the services related to setting up of a factory were removed from the inclusive part of the definition, it would mean no CENVAT credit was available. On a specific query from the bench, he submits that in the case of Kellogs this Bench held that CENVAT credit was available and the Revenue has appealed against the order which appeal is pending before the High Court of Andhra Pradesh for admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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. This Bench has already taken this view in Kellogs. Similar views have been taken by the other Benches in the other cases mentioned above. (emphasis supplied) 39. It needs to be noted that in Kellogs India Pvt. Ltd vs. Commissioner of Central Tax, Tirupathi [GST 2020 (7) TMI 414-CESTAT Hyderabad], the Tribunal observed:- 11. Therefore, we find that the services used in relation to setting up of a plant are neither specifically included nor specifically excluded during the relevant period. That takes us to the main part of the definition which, with respect to manufacturer allows CENVAT credit of services used in or in relat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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