Custom, Excise & Service Tax Tribunal
Filatex India Limited vs Bharuch on 12 November, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
REGIONAL BENCH - COURT NO. 02
EXCISE APPEAL NO. 10733 of 2017-DB
[Arising Out Of OIO-BHR-EXCUS-000-COM-085-16-17 Dated-31/10/2016 Passed by
Commissioner of Central Excise, Customs and Service Tax-Bharuch)
FILATEX INDIA LIMITED .....Appellant
Plot No. D-2/6, Village- Jolva,
Dahej-2, Industrial Estate, Gidc, Dahej,
Bharuch, Gujarat
VERSUS
C.C.E-BHARUCH .....Respondent
Vadodara-II,Gst Bhavan, Subhanpura, Vadodara, Gujarat-390023 APPEARANCE:
Shri Vinay Kansara, Advocate, for the Appellant Shri Rajesh R Kurup, Superintendent (AR) for the Respondent CORAM : HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) FINAL ORDER NO._12683/2024 Date of Hearing :23.08.2024 Date of Decision: 12.11.2024 RAMESH NAIR The issue involved in the present case is that whether the appellant is entitled for Cenvat credit of input services namely imported capital goods clearances charges, consultancy charges (other than civil), insurance charges, input GTA (only machinery related) and erection and commissioning charges (only machinery related) etc used during the setting up of their manufacturing unit i.e. prior to starting of their first commercial production.
The case of the department is that the wording "setting up" and 'activities relating to business' were removed from the definition of input service with effect from 01.04.2011. Hence, the Cenvat credit availed on input services
2|Page E/10733/2017-DB received and used related to procurement of capital goods while setting up their new plant is not admissible to appellant from 01.04.2011 onwards.
2. Shri Vinay Kansara, Learned Counsel appearing on behalf of the Appellant submits that even the wording "setting up" was removed with effect from 01.04.2011 from the inclusive limb of the definition of input service, the Cenvat credit on the subject input service is still admissible in terms of the expression "used by a manufacturer, whether directly or indirectly, in or in relation the manufacture of final product" which is in the main limb. He further submits that the subject input services were used for procurement and erection and installation of capital goods/ machineries/ equipment which was subsequently used for manufacture of excisable goods. Therefore, these services qualify the term of the main limb of the input service as defined under Rule 2 (l) of Cenvat Credit Rules, 2004.
Therefore, the credit is clearly admissible. The credit is admissible irrespective of the fact that whether the same has been received or used prior to commercial production. In support he placed reliance on the following judgments:-
Evonik Speciality Silica India Pvt. Ltd. Vs. CCE (2024) 18 Centax 223 (T) Pepsico India Holdings (Pvt.) Ltd. V/s CCE-2021 (7) TMI 1094 CESTAT Hyderabad Aditya Aluminium V/s CCE-2023 (9) TMI 55 CESTAT Kolkata Sesa Sterlite Limited V/s CCE-2024 (6) TMI 679 - CESTAT Mumbai Piramal Glass Limited V/s CCE-2019 (10) TMI 1032 CESTAT Ahmedabad Supreme Industries Ltd.V/s CCE-2020 (1) TMI 1317 CESTAT Ahmedabad Kellogs India Pvt. Ltd. V/s CCE-2020 (7) TMI 414 - CESTAT Hyderabad Brahmani River Pellets Limited V/s CCE-2023 (10) TMI 287 - CESTAT Kolkata BMM Ispat Ltd. V/s CCE-2019 (5) TMI 587 CESTAT Bangalore Hindalco Industries Limited V/s CCE-2019 (5) TMI 1620 - CESTAT New Delhi
3|Page E/10733/2017-DB Uni Abex Alloy Products V/s CCE-2019 (2) TMI 569 CESTAT Bangalore Deepak Fertilizers And Petrochemicals Corporation Ltd. V/s CCE-2013 (4) TMI 44 Bombay High Court Mukund Limited V/s CCE-2019 (3) TMI 1422 CESTAT Bangalore 2.1 He further submits that in the present case the show cause notice was issued invoking the extended period. Therefore, in absence of any suppression of fact, the entire demand is time bar.
3. Shri R.R Kurup, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order.
4. We have carefully considered the submission made by both sides and perused the records. We find that the appellant in the present matter, the subject services in question on which the appellant has claimed the Cenvat credit are as under:-
Sr. No. Description of Services
1 CHA services for Import of capital goods
2 Consultancy charges
3 Erection & Commission Charges-Machinery Related
4 Financial Charges
5 Insurance Charges
6 Courier Charges
7 Crane Hiring Charges
8 DG set Hiring Charges
9 Labour Charges
10 Charges related to Land Leasehold charges
11 Security Charges
12 Transportation Services related to Machinery
13 Telephone-Internet related
4.1 The revenue in the impugned order denied the Cenvat credit in the
above services on the ground that these services are related to and used in setting up of the factory and since the "setting up" wording was deleted from the inclusion clause of the definition in Rule 2 (l) of the Cenvat Credit Rules, 2004, appellant are not eligible for Cenvat credit. In this regard, we find that even though the wording "setting up" was deleted from
4|Page E/10733/2017-DB the inclusion clause, there is no change in the main clause of the definition which reads as under :-
"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 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. remises, 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."
4.1 From the reading of the above rule, it can be seen that as per the main clause of the definition given in Rule 2 (l)(ii) any service used by a manufacturer, whether directly or indirectly, in or in relation to manufacture of final product and clearance of final product up to the place of removal are considered as input service. In the present case all the services described above are undisputedly used in the factory of the manufacturer. Therefore, the same are clearly covered under the Rule 2 (l)(ii) of the definition of input services. This issue is no longer res-integra as the same has been decided in various judgments. Some of the judgments are reproduced below:
Evonik Speciality Silica India Pvt. Ltd. Vs. CCE (2024) 18 Centax 223 (T) Pepsico India Holdings (Pvt.) Ltd. V/s CCE-2021 (7) TMI 1094 CESTAT Hyderabad Aditya Aluminium V/s CCE-2023 (9) TMI 55 CESTAT Kolkata Sesa Sterlite Limited V/s CCE-2024 (6) TMI 679 - CESTAT Mumbai Piramal Glass Limited V/s CCE-2019 (10) TMI 1032 CESTAT Ahmedabad
5|Page E/10733/2017-DB Supreme Industries Ltd.V/s CCE-2020 (1) TMI 1317 CESTAT Ahmedabad Kellogs India Pvt. Ltd. V/s CCE-2020 (7) TMI 414 - CESTAT Hyderabad Brahmani River Pellets Limited V/s CCE-2023 (10) TMI 287 - CESTAT Kolkata BMM Ispat Ltd. V/s CCE-2019 (5) TMI 587 CESTAT Bangalore Hindalco Industries Limited V/s CCE-2019 (5) TMI 1620 - CESTAT New Delhi Uni Abex Alloy Products V/s CCE-2019 (2) TMI 569 CESTAT Bangalore Deepak Fertilizers And Petrochemicals Corporation Ltd. V/s CCE-2013 (4) TMI 44 Bombay High Court Mukund Limited V/s CCE-2019 (3) TMI 1422 CESTAT Bangalore In the case of Pepsico India Holdings Pvt Ltd addressing the same issue, following order has been passed :-
"13. We have considered the arguments on both sides and perused the records.
14. The appellants had entered into an agreements to lease the land and to get various common facilities in the private industrial township called Sri City to set up their factories. It cannot be argued that manufacturing can take place without a factory nor can it be argued that a factory can be set up without the services in question. It is also not in dispute that M/s. Sri City, the service provider, paid service tax on the services.
15. The department wants to deny them the benefit of the CENVAT credit on the ground that 'services related to setting up of a factory' which were specifically included prior to 1.4.2011 were no longer specifically included post 1.4.2011.
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 part, an inclusive part and an exclusive part. The services used for setting up the factory are neither in the inclusive part of the definition nor the exclusive part of the definition. Therefore, such services were neither specifically included nor were specifically excluded.
17. It takes us to the main part of the definition which must be examined. If it is wide enough to cover the services in question, CENVAT credit will be available, otherwise it will not be available. The main part includes "services used by a manufacturer, whether directly or indirectly, in or in relation to the
6|Page E/10733/2017-DB manufacture of final products and clearance of final products up to the place of removal." The term manufacture is not defined in the Rules.
18. The definitions as per rule 2 of CCR 2004 reads as follows:
RULE 2. Definitions. -(1) In these rules, unless the context otherwise requires,
(a)
(b).....(1)
(2) The words and expressions used in these rules and not defined but defined in the Excise Act shall have the meanings respectively assigned to them in the Excise Act.
Since the term 'manufacture' is not defined in the Rules, the definition 1944 must be considered. Section 2(f) of the Central Excise Act defines 'manufacture' as follows:
2(f) manufacture" includes any process
i) incidental or ancillary to the completion of a manufactured product;
ii) which is specified in relation to any goods in the Section or Chapter notes of the Fourth Schedule as amounting to manufacture; or
iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer;
the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account.
20. Thus, the term 'manufacture' itself is very wide and includes anything incidental or ancillary to manufacture.
21. For a service to qualify as 'input service' 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;
7|Page E/10733/2017-DB
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' under Rule 2 (1) (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.
23. In view of the above, the impugned orders denying CENVAT credit and ordering its recovery along with interest and imposing penalties cannot be sustained. The impugned orders are set aside and the appeals are allowed with consequential reliefs, if any."
In the case of Aditya Aluminium, the Kolkata bench of CESTAT on the identical issue passed the following order :-
"6. We observe that the impugned order has denied the credit availed by the Appellant on the input services availed for 'setting up of a factory as the same has been specifically omitted from the "includes' part of the definition vide Notification No. 03/2011 dated 01.03.2011, w.e.f. 01.04.2011. Thus it is necessary to look into the definition of 'input services', w..e.f. 01.04.2011.
7. The relevant portion of Rule 2(1) w.e.f 01.04.2011 is as under:-
"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 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, remises, 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,
8|Page E/10733/2017-DB 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,
8.. We observe that the aforesaid definition has three limbs- (1) 'means clause' (2) 'includes clause (3) 'excludes clause'. It is seen that the credit in dispute, which was availed during the relevant period, were inter alia used for setting up of the plant. These input services are directly linked to the manufacture of the final product in as much as without availing the aforesaid services, the Appellant could not have set up the factory for manufacture of the goods. Hence, the input services utilized for setting up of a factor are covered within the ambit of 'means clause' i.e. service "used by a manufacturer whether directly or indirectly in or in relation to the manufacture of the final products". Since the subject input services are covered in the 'main clause of the definition of input service. unless it is specifically excluded under the excludes clause of the definition, the Appellant is entitled to CENVAT Credit on the subject input services used in setting up of the factory. This view has been held by the Tribunal in the case of Pepsico India Holdings Pvt. Ltd., Vs. CCT, Tirupati, 2021 (7) TMI 1094- CESTAT Hyderabad. The relevant part of the decision is extracted below:
"16. We find that the definition of 'input service prior to 1.04.2011 had two parts- a main part of the definition and an inclusive part of the Excise Appeal No. 76189 of 2018 5 definition. This inclusive part specifically included the services availed for 'setting up the factory'. After 1.04.2011, it has three parts- a main part, an inclusive part and an exclusive part. The services used for setting up the factory are neither in the inclusive part of the definition nor the exclusive part of the definition. Therefore, such services were neither specifically included nor were specifically excluded.
17. It takes us to the main part of the definition which must be examined. If it is wide enough to cover the services in question, CENVAT credit will be available, otherwise it will not be available The main part includes "services 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. The term manufacture is not defined in the Rules.
18. The definitions as per of CCR 2004 reads as follows RULE 2 Definitions. (1) in these rules, unless the context otherwise requires:
(a)
(b)....(1)
(2) The words and expressions used in these rules and not defined but defined in the Excise Act shall have the meanings respectively assigned to them in the Excise Act.
9|Page E/10733/2017-DB
19. Since the term 'manufacture' is not defined in the Rules, the definition under the Central Excise Act, 1944 must be considered.
Section 2(f) of the Central Excise Act defines 'manufacture' as follows 2(f) "manufacture" includes any process
i) incidental or ancillary to the completion of a manufactured product;
ii) which is specified in relation to any goods in the Section or Chapter notes of the Fourth Schedule as amounting to manufacturer; or
iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labeling or re-labelling of containers including the declaration or alteration of retail sale price on Excise Appeal No. 76189 of 2018 6 it or adoption of any other treatment on the goods to render the product marketable to the consumer; the word "manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account.
20. Thus, the term 'manufacture' itself is very wide and includes anything incidental or ancillary to manufacturer.
21. For a service to qualify as 'input service' under CENVAT Credit Rules, 2004 post 2011, the service in question need not be covered even by the very wide definition of manufacturer under section 2(1) 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 (l.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. Service used in setting up the factory are, therefore, unambiguously covered as "input services' under Rule 2 (1) (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 Excise Appeal No. 76189 of 2018 7 credit on the input services used. 10 | P a g e E/10733/2017-DB This Bench has already taken this view in Kellogs. Similar views have been taken by the other benches in the other cases mentioned above.
23. In view of the above, the impugned orders denying CENVAT credit and ordering its recovery along with interest and imposing penalties cannot be sustained. The impugned orders are set aside and the appeals are allowed with consequential reliefs, if any.
9. In the case of M/s Bharat Coking Coal Ltd., Vs., CCE & ST, Ranchi 2021 (10) TMI 383, the Tribunal Kolkata, allowed CENVAT Credit of the service tax paid towards setting up of plant. The relevant portion of the decision is reproduced below:
"6. The issue before us is whether credit is available on Coal handing Plant (CHP), which has been set up by the appellant for evacuation of coal from its mining premises. It is relevant to note the preamble to the contract which reads as below:-..
From the above, it appears that the purpose of setting up of the CHP is to load the coal into the railway wagons in an automated manner after the coal is crushed into the desired size. It is not in dispute that the service used by the appellant is for modernization of the coal loading process. The definition of input service specifically includes services received by a manufacturer for modernization of a factory. We have also perused the decision of the Tribunal in the case of Pepsico India Holdings (P) Ltd., (Supra) relied upon by the appellant. The Tribunal has observed that without setting up of the factory, there cannot be any manufacture and the mere fact that the words 'setting up of factory"
has not been retained in the definition of input services post 01.04.2011, the same will not mean that the benefit of credit has been taken away by the legislature. The relevant portion of the decision is reproduced below:-
7. We thus find that services used for setting up of the factory eve after 01.04.2011 would be eligible for credit."
10. We observe that similar position has also been held in the following decisions:
Jindal Steel and Power Ltd, Vs. Commissioner of Central Tax, Rourkela vide Final order No. 75613/2023 dated 08.06.2023.
Shell India Pvt. Ltd. Vs. Commissioner of Central Tax, Bangalore North 2021-VIL-820- CESTAT-BLR-ST maintained in 2023-VIL-01-KAR-ST.
Reliance Corporate IT Park Ltd, Vs. Commissioner of Central Excise Thane-II 2023-VIL- 136-CESTAT-Mum-ST.
Hindustan Zink Ltd., Vs. Commissioner of CGST, Excise & Customs, Udaipur 2021 (8) TMI 872-CESTAT New Delhi.
Kellogs India Pvt. Ltd., Vs. CCT, Tirupathi GST, 2020 (7) TMI 414- CESTAT Hyderabad. CCE, Kolkata Vs. Texmaco UGL Rail, 2019 (7) TMI 1651-CESTAT Kolkata.
Hindaico Industries Ltd., Vs. CGST, Jabalpur, 2019 (5) TMI 1620- CESTAT New Delhi.
Linde India Pvt. Ltd., Vs. Commissioner of CGST & CX, Rourkela 2023 (5) TMI 718 - CESTAT, Kolkata.
11 | P a g e E/10733/2017-DB Bharat Coking Coal Ltd., Vs. CCE & ST, Ranchi 2023 (6) TMI 297- CESTAT-Kolkata.
11. Following the decisions cited above, we observe that the subject input services have a direct nexus with the manufacture of finished goods in the 'means' clause of the definition of input services. Accordingly we hold that even if the word 'setting up of a factory' has been specifically excluded from the definition w.e.f. 01.04.2011, such services are covered within the ambit of main clause of the definition. Hence, it would still qualify as an input service as per Rule 1(1) of CCR, 2004. In the light of the above discussions, we allow the Cenvat credit availed by the Appellant on the input services used in setting up of the factory. Consequently, the impugned order confirming the demand along with interest and imposing penalty is set aside.
12. In view of the above discussion, we allow the appeal filed by the Appellant."
Similarly the CESTAT bench of Mumbai in the case of Sesa Sterlite Ltd observed as under:-
"3. The definition of input service, prior to its amendment w.e.f. 01.04.2011 provided the phrase "used in relation to setting up, modernization, renovation or repairs of a factory" in the inclusive part contained therein. The said definition was amended vide Notification No.3/2011 dated 01.03.2011 (w.e.f. 01.04.2011). The effect of such amendment was that the phrase "setting up of the factory" was replaced with the phrase "used in relation to modernization, renovation or repairs of a factory". The other amendment brought into the definition clause of input service was that certain excluded category of services were incorporated therein, which should not be considered as 'input service', for the purpose of availment of Cenvat credit of service tax paid thereon. The excluded category of services provided under Rule 2(1) ibid interalia, includes "service portion in the execution of the works contract and construction services insofar as they are used for (a) construction or execution of works contract 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".
4. On consideration of the disputed services used/utilised by the appellants as listed out in paragraph 1 above, we find that such services were not falling under the exclusion clause provided under Rule 2(1) (A) ibid. Since, the disputed services were not specifically falling under the excluded category and were used in relation to manufacture of the final products, in our considered view, denial of Cenvat Credit of service tax paid on those services cannot be sustained. We find that the issue arising out of the present dispute has been adequately dealt with by the Co-ordinate Bench of This Tribunal in 12 | P a g e E/10733/2017-DB the case of Pepsico India Holdings (Pvt.) Ltd. Vs. Commissioner of Central Tax, Tirupati, reported in 2021 (7) TMI 109-CESTAT HYDERABAD. The relevant paragraphs appearing in the said order are extracted herein below:
"21. For a service to qualify as 'input service' 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' under Rule 2 (1) (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.
5. In view of the foregoing discussions, we do not find any merits in the impugned order, insofar as it has denied the Cenvat Credit and confirmed the adjudged demands on the appellants. Therefore, the impugned order is set aside and the appeal is allowed in favour of the appellant."
Similar issue has been dealt with by the Ahmedabad bench in the case of Piramal Glass Ltd wherein the tribunal has taken the following view:-
"4. I have heard both the sides and perused the record. I find that there is no dispute that the appellant have an existing manufacturing factory wherein many other plants and machinery and two furnace were already setup and with the said existing facility, the appellant are manufacturing excisable goods for last many years. For enhancing their production, the appellant set up a new furnace, it cannot be said that they have setup a new factory. It is merely an expansion of the existing factory and therefore, even if the term "setting up" of factory is removed from the inclusion clause of definition of input service, it does not adversely affect the appellant to avail Cenvat credit on various services. Moreover, as per the amendment in Rule 2(1) of Cenvat Credit Rules, 2004 certain services were excluded from the definition of Input Service and only those services were not be eligible for Cenvat credit. On careful perusal of the exclusion clause, I do not find the services in question 13 | P a g e E/10733/2017-DB in the present case, fall under the exclusion clause. For this reason, the appellant's claim for availment of Cenvat credit cannot be rejected.
5. The very same issue has been considered by the Tribunal in the case of Shiruguppi Sugar Works Limited (supra) wherein in identical facts, the Tribunal has allowed Cenvat credit. The relevant portion of the order is reproduced :-
"6. After considering the submissions of both the parties and perusal of the material on record, I find that the appellant have availed the credit on erection/commissioning of machinery, which is used for manufacture of sugar. Further, I find that these impugned services fall in the definition of input service even after 1.4.2011. Further, I find that in the case of Uni Abex Alloy Products (supra), this Tribunal has held that it is a settled law that CENVAT credit is available if the impugned services are used in or in relation to the manufacture of final products and if the nexus of such services with the manufacture is established. Further, I find that it has consistently been held by the Hon'ble Supreme Court that the words 'in relation to manufacture' have been used to widen and explain the scope, meaning and content of the definition and applying the same ratio, CENVAT credit of service tax paid on input services is admissible so far as input services have been used directly or in directly, in or in relation to the manufacture of final product even if the term selling up has been deleted from the inclusive portion of the definition Similarly, in the case of Birla Corporation Limited vs. Commissioner-2014 (34) STR 589, CENVAT credit on erection, commissioning and installation services have been allowed Therefore, by following the ratio of the decisions cited supra, I am of the considered view that denial of CENVAT credit on erection, commissioning and installation of machinery is not sustainable in law. Therefore, I set aside the impugned order by allowing the appeal of the appellant. Once I am allowing the appeal of the appellant on merit, I am not required to go into the question of limitation."
6. In the above decision of the Tribunal, it was correctly interpreted that even if the term "setting up of factory" is removed, eligibility of Cenvat credit has to be ascertained in view of the main clause of the definition according to which all the services used in or in relation to the manufacture of final product, directly or indirectly are input service. In the present case, installation of new furnace is directly used in relation to manufacture of final product. Therefore, even as per the main clause of the definition of the input service, these services are input services and credit is rightly availed by the appellant."
4.3 In view of the above judgments we are of the view that even though the wording "setting up" was deleted from the inclusion clause of the definition but all the services are covered under the main clause of definition of input services as per Rule 2 (l) of Cenvat Credit Rules, 2004 so 14 | P a g e E/10733/2017-DB far these services were used by the manufacturer, directly or indirectly in or in relation to the manufacture of the final product. Therefore, in our view, the cenvat credit on the subject input services are admissible.
5. Accordingly the impugned order is set aside. Appeal is allowed.
(Order pronounced in the open Court on 12.11.2024) (RAMESH NAIR) MEMBER (JUDICIAL) (C.L. MAHAR) MEMBER (TECHNICAL) Dharmi