Komatsu India Private Limited Vs Commissioner of GST and Central Excise (CESTAT Chennai)
In Komatsu India Private Limited Vs Commissioner of GST and Central Excise, the appeal was filed against an order upholding denial of CENVAT credit of ₹84,08,342/- availed on erection, commissioning, installation, consulting engineering, and manpower supply services used for expansion of manufacturing facilities for hydraulic excavators during October 2014 to June 2015. The lower authorities denied credit on the ground that the phrase “setting up of a factory” was removed from Rule 2(l) of the CENVAT Credit Rules, 2004 with effect from 01.04.2011, and therefore services used for expansion were not eligible.
The appellant contended that the services were directly related to manufacturing activities and fell within the main limb of “input service,” which remained unchanged. It was argued that expansion of an existing factory is distinct from setting up a new factory and that the exclusion clause applies only to construction, civil structures, or foundation work, not to installation of machinery. The appellant also submitted that the demand was time-barred, as the show cause notice was issued beyond the one-year limitation period without invoking extended limitation.
The Tribunal observed that the factory was already operational and the services were used for expansion, which cannot be equated with setting up a new factory. It held that deletion of the phrase “setting up” from the inclusive portion does not restrict the scope of the main definition, which continues to cover services used directly or indirectly in relation to manufacture, unless specifically excluded. Since the services in question were not shown to fall within the exclusion clause, the credit was admissible.
