Cenvat Credit on Input Services for Setting up New Plant admissible despite Definition Change in Rule 2 (l) of Cenvat Credit Rules, 2004: CESTAT [Read Order]
The CESTAT held that services used by the manufacturer were in relation to manufacturing the final product, the Cenvat credit is admissible
![Cenvat Credit on Input Services for Setting up New Plant admissible despite Definition Change in Rule 2 (l) of Cenvat Credit Rules, 2004: CESTAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2024/11/CESTAT-CESTAT-Ahmedabad-Cenvat-Credit-Cenvat-Credit-on-Input-Services-Input-Services-for-Setting-up-New-Plant-taxscan.jpg "Cenvat Credit on Input Services for Setting up New Plant admissible despite Definition Change in Rule 2 (l) of Cenvat Credit Rules, 2004: CESTAT [Read Order]")
In a recent ruling, the Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT ) held the Cenvat Credit on Input Services for Setting up New Plant admissible despite the definition change in Rule 2(l) of the Cenvat Credit Rules, 2004. The main issue, in this case, is whether the appellant is entitled to claim Cenvat credit on input services such as imported...
In a recent ruling, the Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT ) held the Cenvat Credit on Input Services for Setting up New Plant admissible despite the definition change in Rule 2(l) of the Cenvat Credit Rules, 2004.
The main issue, in this case, is whether the appellant is entitled to claim Cenvat credit on input services such as imported capital goods clearance, consultancy (excluding civil), insurance, input GTA (related to machinery), and erection and commissioning charges (related to machinery) used during the setup of their manufacturing unit before starting commercial production.
Become PF & ESIC Pro: Basic to Advance Course - Enroll Today
The issue raised by the department in this appeal is that the terms "setting up" and "business-related activities" were eliminated from the definition of input service on 1-04-2011. As a result, the appellant is no longer eligible to claim the Cenvat credit for input services obtained and used in connection with the purchase of capital goods during the establishment of their new plant as of 1-04-2011.
It was contended by the counsel on behalf of the appellant that although the word “setting up” was removed from 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 to the manufacture of final product.".
It was further contended by the assessee’s counsel that the input services were used for procuring and installing machinery later used in manufacturing excisable goods, qualifying as input services under Rule 2(l) of the Cenvat Credit Rules, 2004, making the credit admissible.
Become PF & ESIC Pro: Basic to Advance Course - Enroll Today
The CESTAT, relying on several judicial precedents, was of the view that even though "setting up" was deleted from the inclusion clause, the services fall under the main clause of input service as defined in Rule 2(l) of the Cenvat Credit Rules, 2004. The CESTAT held that services used by the manufacturer were in relation to manufacturing the final product, the Cenvat credit is admissible.
The CESTAT, comprising of Ramesh Nair ( Judicial Member ) and C.L. Mahar ( Technical Member ) set aside the impugned order and allowed the appeal.
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
