CSCI Steel Corporation India Pvt Ltd Vs C.C.E (CESTAT Ahmedabad)
CESTAT Ahmedabad held that as the order is passed without examining the admissibility of input services credit under the main part of the definition of input service, the same is vague and non-speaking order.
Facts- This appeal has been filed by M/s. CSCI Steel Corporation India Pvt. Ltd. against denial of Cenvat Credit. The short issue involved in the present dispute is regarding availability of Cenvat Credit on various services viz. Management Consultancy services, Legal and Professional services of / and services used mainly in erection and commissioning, laying of foundation and making structure in support of capital goods/ machinery and also other services such as rent-a-cab, hotel services, insurance services, architectural services etc., and whether they are valid input services within the meaning of Rule 2(l) of the Cenvat Credit Rules, 2004 during the period 2012-14.
Conclusion- It is seen that the order of Commissioner examines the omission of words in initial “setting up” in the inclusive part of the definition of input service, but fails to examine the admissibility of input services credit of these services under the main part of the definition of input service.
Held that the impugned order does not examine the admissibility of Cenvat Credit of these services in the main part of the definition, but relies solely on the changes made in the inclusive part of definition. It is seen that the impugned order does not examine which service would fall under which exclusion clause. The order in this regard is vague and not a speaking order.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
This appeal has been filed by M/s. CSCI Steel Corporation India Pvt. Ltd. against denial of Cenvat Credit.
2. Learned Counsel argued that the short issue involved in the present dispute is regarding availability of Cenvat Credit on various services viz. Management Consultancy services, Legal and Professional services of / and services used mainly in erection and commissioning, laying of foundation and making structure in support of capital goods/ machinery and also other services such as rent-a-cab, hotel services, insurance services, architectural services etc., and whether they are valid input services within the meaning of Rule 2(l) of the Cenvat Credit Rules, 2004 during the period 2012-14.
2.1 Learned Counsel argued that pursuant to audit conducted for the material period, certain audit observations were made, interalia, to the effect that the Appellant had wrongly availed Cenvat Credit and vide letter dated. 20.10.14, the Appellant inferred that they reversed the entire alleged wrongly availed Credit. Further, he claimed that the Appellant had reversed the entire Credit on account of insistence by the Audit Party along with amount of penalty of Rs. 1,28,38,089/- under protest. That the Appellant had neither agreed, nor voluntarily paid any such amount during the course of Audit at all as evident from their letter dated 02.04.2015.
2.2 Learned Counsel argued that the Appellant had not sought closure of the issue, since penalty was also imposed on them by audit party, and their request to close the issue under Section 11A(2B) / Section 73(3) was not adhered to by audit party. In fact, vide letter dt.7.4.15, the Audit Commissioner categorically stated that the Appellant is free to litigate the matter. Pursuant to this, SCN dt.27.7.15 was issued to the Appellant, seeking to recover and appropriate the credit and penalty amounts paid under protest.
2.3 Learned Counsel argued that Cenvat Credit has been sought to be denied becasuse during the material period, though registered under Central Excise laws, the Appellant had not yet started commercial production and hence, all the services availed by them was deemed to be towards “setting up” of the factory and as such, assumed to be excluded from the scope of the term “input service” under Rule 2(l) of CCR, 04.
2.4 Learned Counsel argued that the issue on hand is no more Res Integra, inasmuch as the CESTAT in the following cases, has categorically held that after 1.4.11, even if the words “setting up” are removed from the “inclusive” part of the definition of the term “input service” does not mean it is omitted from the first limb of the said definition, which covers services used in or in relation to, directly or indirectly, for manufacture of finished goods. The judicial view as it exists states that without setting up, manufacture is not possible and hence, the first limb of the definition of the term “input service” includes setting up of factory as well. He relied upon the following decisions:
