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TMI Blog2023 (1) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... seen that the order of Commissioner examines the omission of words in initial setting up in the inclusive part of the definition of input service, but fails to examine the admissibility of input services credit of these services under the main part of the definition of input service. The impugned order does not examine the admissibility of Cenvat Credit of these services in the main part of the definition, but relies solely on the changes made in the inclusive part of definition - In terms of the decision in the case of Pepsico India Holdings (Pvt.) Ltd [ 2021 (7) TMI 1094 - CESTAT HYDERABAD] , it is apparent that if the services provided in relation to setting up in unit would be covered under the main part of the definition. Unless specifically excluded by exclusion clause. It is seen that the impugned order does not examine which service would fall under which exclusion clause. The order in this regard is vague and not a speaking order. There are no option but to set aside the impugned order and remand the matter back to the original Adjudicating Authority to pass fresh order in the light of the Tribunal decisions in the case of Pepsico India Holdings (Pvt.) Ltd - Moreover, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty amounts paid under protest. 2.3 Learned Counsel argued that Cenvat Credit has been sought to be denied becasuse during the material period, though registered under Central Excise laws, the Appellant had not yet started commercial production and hence, all the services availed by them was deemed to be towards "setting up" of the factory and as such, assumed to be excluded from the scope of the term "input service" under Rule 2(l) of CCR, 04. 2.4 Learned Counsel argued that the issue on hand is no more Res Integra, inasmuch as the CESTAT in the following cases, has categorically held that after 1.4.11, even if the words "setting up" are removed from the "inclusive" part of the definition of the term "input service" does not mean it is omitted from the first limb of the said definition, which covers services used in or in relation to, directly or indirectly, for manufacture of finished goods. The judicial view as it exists states that without setting up, manufacture is not possible and hence, the first limb of the definition of the term "input service" includes setting up of factory as well. He relied upon the following decisions: * Pepsico India Holdings (P) Ltd. 2022(56 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Life Sciences Ltd. 2019 (29) G.S.T.L. 319 (Tri. - All) e. M/s.Hindustan Petroleum Corporation Ltd. 2016 (9) TMI 680 [Cestat-Hyd.] f. SHIRUGUPPI SUGAR WORKS LTD. 2019 (3) TMI 667 - CESTAT BANGALORE g. UNI ABEX ALLOY PRODUCTS2019 (2) TMI 569 - CESTAT BANGALORE 2 Works Contract Used for erection / commissioning of plant and machinery does not involve construction of factory premises -same as all above- a. CMC Ltd. 2017(51) STR 17 (Tri-Hyd) 3 Supply of Tangible Goods Hiring of production related equipment, which otherwise qualify as capital goods, clearly establishes nexus with production related activity and hence, admissible input service a. Board Circular No.168/3/2013-ST dt.15.4.13. b. Adani Ports & SEZ Ltd. 2016 (42) S.T.R. 1010 (Tri. - Ahmd) c. M/s. Century Pulp and paper 2019(2) TMI 491(TRI.- New Delhi) d. M/S. CENTURY CEMENT 2019 (2) TMI 1034 (TRI.- New Delhi) e. Brindavan Bottlers Ltd. 2019 (3) TMI 1428- CESTAT ALLAHABAD f. Aims Pharma Ltd. 2019(5) TMI 240-CESTAT Ahm 4 Internet and Telecommunication 1. Being a mode of communication used within factory, it is a valid input Service 2. It indirectly has a nexus with eventual production operations in the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TES (I) DEV. CENTRE PVT. LTD.2017 (5) G.S.T.L. 99 (Tri. - Bang.) 13 Consulting Engineering 1. Without basic engineering, the plant cannot be made operational and it has direct nexus with production and productivity aspects 2. Supervision, engineering support and ancillary services is also a part and parcel of Consulting Engineering necessary in relation to eventual manufacture of final products within factory premises. a. IDEA CELLULAR LTD.2016 (3) TMI 1117 - CESTAT MUMBAI b. Hindalco Industries Ltd.2018 (12) TMI 1476 -CESTAT BANGALORE c. Circular No.943/4/2011-CX dt.29.4.11. d. M/s Ashok Agency 2016(41) S.T.R 647 (Tri- Hyd.) e. Hollister Medical India P. Ltd. 2017(49) STR 426(Tri Del) 28 Management Consultancy Management consultancy, including consulting engineering for starting business and getting suitable approvals etc a. Specifically covered under Rule 2(l) of CCR, 04 b. Jubilant Life Sciences Ltd. 2019 (29) G.S.T.L. 319 (Tri. - All c. Jubilant Life Sciences Ltd. - 2019 (29) G.S.T.L. J74 (S.C.) d. Manchanda & Manchanda 2019 (21) G.S.T.L. 529 (Tri. - Del) e. Hollister Medical India P. Ltd. 2017(49) STR 426(Tri-Del) f. Reliance Industries Ltd. 2016(45) STR 383( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Definition after 01.04.2011, read as follows: "[(l) "input service means any service,--- (i) used by a provider of [output service] for providing an output service, or (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacturer of final products and clearance of final products up to 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:- [(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for--- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant case have been used for setting up of Plant and Machinery, factory and office premises and fall under the exclusion clause(s) of the definition of input service Supra. 37.6 I find that the exclusion clauses provide that service portion in execution of works contract and construction service used for building, civil structure or part thereof or laying of foundation or making of structures for support of capital goods are excluded from definition of input service. These services will be eligible as input service' if used for the provision of one or more of the 'specified service 'i.e. construction/ works contract of building or structure or lying of foundation etc. In the instant case the assessee is a registered manufacturer and registered as a service recipient. They are not engaged in providing of any such services. It therefore I find that the services falling under the exclusion clause of the input service definition as discussed in foregoing para, used by them for setting up of their plant and Machinery at Dahej cannot be termed as 'Input service' for them. 37.7 Further I find that the services viz. "Management Consultancy services, Legal Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the cenvat credit of service tax amounting to Rs.7,55,44,027/- availed on input services, which are not covered under the definition of input service as provided under the Rule 2(7) of the Cenvat Credit Rules, 2004 and hence, it is not admissible and it is recoverable under Rule 14 of CENVAT Credit Rules, 2004 read with provisions of section 73 of Finance Act, 1994 and section 11A of the Central Excise Act, 1994." It is seen that the order of Commissioner examines the omission of words in initial "setting up" in the inclusive part of the definition of input service, but fails to examine the admissibility of input services credit of these services under the main part of the definition of input service. 4.2 It is seen that the issue has been examined by various Courts. Tribunal in the case of Pepsico India Holdings (Pvt.) Ltd.- 2022 (56) GSTL 22 (Tri.- Hyd.)has held as follows: "16. We find that the definition of 'input service' prior to 1-4- 2011 had two parts - a main part of the definition and an inclusive part of the definition. This inclusive part specifically included the services availed for setting up the factory. After 1-4-2011, it has three parts - a main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e' under Cenvat Credit Rules, 2004 post 2011, the service in question need not be covered even by the very wide definition of manufacture under Section 2(f) of the Central Excise Act. Any service which is used not only in manufacture but also in relation to' manufacture will also qualify as input service. The scope of input service is further enlarged with the expression whether directly or indirectly used in the definition of input service. Thus, there are: (a) Actual manufacture; (b) Processes incidental or ancillary to manufacture which are also manufacture; (c) Activities directly in relation to manufacture (i.e., in relation to 'a' and 'b' above); (d) Activities indirectly in relation to manufacture (i.e., in relation to 'a' and 'b' above); 22. All four of the above qualify as input service as per Rule 2(1)(ii) as applicable post 1-4-2011. Although setting up the factory is not manufacture in itself, it is an activity directly in relation to manufacture. Without setting up the factory, there cannot be any manufacture. Services used in setting up the factory are, therefore, unambiguously covered as 'input services' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in the case of Reliance Industries Ltd.- 2022 (4) TMI 729 - (Cestat- Ahmd). Examined the exclusion clause of the definition of input services. In para 4.1 & 4.2 following has been observed: "4.1 The contention of the adjudicating authority is that the services of ECIS were used for construction of building or a civil structure therefore, the services of ECIS falls under the exclusion clause provided under Clause A of Rule 2 (l) of Cenvat Credit Rules, 2004. In this regard it is necessary to first understand the nature of the capital goods/ structure for which service of ECIS was received to arrive at conclusion that whether these services were provided in execution of Works Contract Service or construction of building or civil structure. The appellant has submitted a pictorial presentation, submitted to the department on 23.04.2019 which is scanned below: -------- -------- -------- 4.2 On carefully going through the above pictorial presentation we find that the capital goods/ structure for which ECIS service was received is clearly in respect of the plant and machinery which are itself capital goods. Therefore, it is not coming out from the fact as reproduced abov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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