Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise & ... vs M/S Deify Infrastructure Ltd. on 30 April, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH- COURT NO. I
Excise Appeal No. 50005 of 2025
(Arising out of Order-in-Original No. 07/COMMR/CE/RPR-UJN/2022-23 dated
31.03.2023 passed by Principal Commissioner, CGST & Central Excise, Ujjain.)
The Commissioner, CGST & ....Appellant
Central Excise, GST Building
Dhamtari Road, Tikrapara,
Raipur(C.G.)-492001
Versus
M/s Deify Infrastructure Ltd. ....Respondent
F-8, MIDC Industrial Area, HIngna Road APPEARANCE:
Ms. Sukriti Das, Advocate for the Respondent Shri S.K. Ray, Authorised Representative of the Department CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) DATE OF HEARING/ DECISION: April 30, 2025 FINAL ORDER NO. 50579/2025 JUSTICE DILIP GUPTA The order dated 31.03.2023 passed by the Principal Commissioner, dropping the demand of CENVAT credit, interest and penalties upon the appellant proposed in the show cause notice dated 18.04.2016 has been assailed in this appeal filed by the department.
2. The issue involved in this appeal is as to whether CENVAT credit would be available to the respondent Deify Infrastructure Ltd1 on various input services used in relation to "setting up of factory" even after deletion of the phrase "setting up of factory" from the definition 1 the Respondent 2 E/50005/2025 of input service with effect from 01.04.2011 under rule 2(l) of the Cenvat Credit Rules, 2004.
3. The respondent had entered into Engineering Procurement Construction contract for setting up/expansion of Coke Oven Plant, Power Plant, Steel Melting Shop Br and Structural Mill and Iron ore Palletization Plant with Deify Infrastructure Limited and for this purpose, received input services and availed CENVAT credit of this service tax paid under the provisions of the CENVAT Credit Rules.
4. A show cause notice dated 18.04.2016 was issued to the respondent proposing to demand the credit which could not have been taken by the respondent.
5. A Division Bench of this Tribunal in M/s Kellogs India Pvt Ltd vs. Commissioner of Central Tax2 observed as follows:
"7. We have considered the arguments on both sides and perused the records. The short point for consideration is whether the appellant is entitled to CENVAT credit on the service tax paid under the deeds for infrastructure development agreement, lease deed and subsequent maintenance on which service tax was paid by the input service provider under the head of "renting of immovable property service". It is not in dispute that these services have been availed by the appellant and payments have been made. It is also not in dispute that the service provider had classified these services under the head of renting of immovable property service. The department is of the opinion that no CENVAT credit is admissible on these services because they are used in connection with setting up of the plant which has been deleted from the inclusion part of Rule 2(l) of CENVAT Credit Rules 2004.
8. As can be seen from the three components of the definition of input service under Rule 2(l) of CENVAT Credit Rules 2004, the initial part says that any service used by a service provider in connection with provision of output service or by a manufacturer in or in relation to manufacture of the final products whether directly or indirectly is covered under the definition of input service.
2 Central Excise Appeal No. 30333 of 2019 decided on 20.02.2020 3 E/50005/2025
9. This definition has been further enlarged by adding several other input services such as those services used in relation to setting up, modernisation renovation etc. The terms "setting up" has been deleted with effect from 01.04.2011 and hence was not on the Statute during the relevant period.
10. The third part of the definition excludes certain types of services and this exclusion part of the definition also does not have in it, the services used in setting up of the plant.
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 6 relation to manufacture whether directly or indirectly. This definition, in our considered view, is wide enough to cover in its compass any services used for setting up a Plant especially when the services are used for obtaining the land on lease. Without such land no factory can be set up nor can any manufacture take place. We find a direct nexus between the manufacture of the final products and the services used for setting up of plant by leasing the land."
6. This decision was followed by the Division Bench of this Tribunal in Pepsico India Holdings (Pvt.) Ltd vs. Commissioner of Central Tax3.
7. The Principal Commissioner has relied upon both these decisions of the Tribunal to discharge the show cause notice.
8. Learned authorized representative appearing for the department has placed grounds of appeal to contend that that Principal Commissioner committed an illegality in following the two decisions of the Tribunal.
9. In the grounds of appeal it has been stated that since the decisions rendered by the Tribunal in Kellogs India and Pepsico India have been assailed before the Telangana High Court, it cannot be said that the decisions of the Tribunal had attained finality. 3 Service Tax Appeal No. 30122 of 2018 decided on 26.07.2021 4 E/50005/2025
10. This ground taken in the appeal is without any basis. So long as the decisions of the Tribunal have not been set aside, the Principal Commissioner was bound to follow the decisions.
11. It also needs to be noted that the decisions of the Tribunal in Kellogs India and Pepsico India were, subsequently, followed by a Division Bench of the Regional Bench of the Tribunal at Bangalore in M/s. Shell India Pvt Ltd vs. Commissioner of Central Tax, Bagalore North4. The department had filed Central Excise Appeal No. 16 of 2022 before the Karnataka High Court against the said decisions of the Tribunal and the High Court by a judgment dated 01.12.2022 dismissed the appeal. Feeling aggrieved, the department filed a Special Leave Petition (Civil) before the Supreme Court which was dismissed on 17.01.2025.
12. In view of the aforesaid decisions of the Tribunal in Kellogs India and Pesico India, there is no error in the order passed by the Principal Commissioner.
13. The appeal is, accordingly, dismissed.
(Order dictated in the Open Court) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Shenaj 4 Service Tax Appeal No. 21948 of 2018 decided on 09.11.2021