Basf Vs C.C.E. & S.T.-Vadodara-ii (CESTAT Ahmedabad)
CESTAT Ahmedabad held the eligible cenvat credit of service tax paid during setting up of the factory is duly available as without use of such service, the appellant could not have possibly manufactured the excisable goods.
Facts- The issue relates to availment of cenvat credit of the service tax paid by the appellant during the period April 2011 when the setting up of the factory started to the period March 2016 when the setting up of the factory was completed and commercial production started.
The appellant had availed various input services and the show cause notice seeks to deny cenvat credit of these services in relation to fabrication of plant and machinery in the factory and making plant and machinery operational. The show cause notice essentially relies on the changes made in the definition of input services appearing in Rule 2(l) of the Cenvat Credit Rules, 2004.
Conclusion- With regard to availment of cenvat credit of service tax paid during setting up of the factory, it is held that without use of these services, the appellant could not have possibly manufactured the excisable goods. Hence, cenvat credit of the same is duly available.
Also held that the exclusion clause of the definition ‘input service’ would obviously make such services ineligible for the cenvat credit under the head of ‘Input Service’. It is seen that the appellant has claimed that they have on their own not availed such credits relating to the exclusion clause.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
These two appeals have been filed by M/s Basf and Shrichandrashekhar Kate, Manager Taxation of the appellant.
1.1 The appellant company, BASF (India) Limited (BIL) is engaged in managing goods falling under Chapter 39 to First Schedule of the Central Excise Tariff Act, 1985.
1.2 The issue relates to availment of cenvat credit of the service tax paid by the appellant during the period April 2011 when the setting up of the factory started to the period March 2016 when the setting up of the factory was completed and commercial production started.
1.3 The appellant had availed various input services and the show cause notice seeks to deny cenvat credit of these services in relation to fabrication of plant and machinery in the factory and making plant and machinery operational. The show cause notice essentially relies on the changes made in the definition of input services appearing in Rule 2(l) of the Cenvat Credit Rules, 2004. The changes made in the definition are as follows:
Before 01.04.2011:
“2. (l) “input service” means any service,-
(i) used by a provider of taxable service for providing an output service, or
(ii) used by the 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 setting up, modernization, renovation or repairs of a factory,……………………………………………………………………………………….. up to the place of removal:”
After 01.04.2011 and as amended
“2(l) “input service” means any service. –
(i) used by a provider of taxable 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 up to the place of removal, and includes services used in relation to modemization, renovation or repairs of a factory……………………………………………………… outward transportation up to the place of removal;
After the issuance of Notification no. 28/2012-C.E. (NT) dated 20.06.2012.
RULE 2(l): Input Services
“Input Service” means any service
