2025-VIL-1068-CESTAT-CHE-CE
  1. Home
  2. 2025-VIL-1068-CESTAT-CHE-CE

CENTRAL EXCISE CESTAT Cases

Central Excise - Rule 2(l) of CENVAT Credit Rules, 2004 - Input Service; Setting up of a factory - CENVAT credit on various services such as landscaping, lease rent, infrastructure development, erection of factory sheds, and installation of equipment, used for the initial setting up of factory – Denial of credit on the ground that with effect from 01.04.2011, the phrase ‘services in relation to setting up of factory’ had been deleted from the inclusive part of the definition of ‘input service’ under Rule 2(l) of the CENVAT Credit Rules, 2004, by Notification No. 03/2011-CE (NT) - Whether CENVAT credit on services used for setting up a factory is admissible after 01.04.2011, despite the deletion of the specific expression 'setting up of a factory' from the inclusive part of the definition of 'input service' in Rule 2(l) of the CENVAT Credit Rules, 2004 - HELD - The definition of 'input service' comprises a 'means' clause, an 'includes' clause, and an 'excludes' clause. The primary eligibility is determined by the 'means' clause, which defines input service as any service "used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products". The services in question, used for setting up the plant, have a direct and inextricable nexus to the manufacturing activity, as manufacturing cannot commence without them. Therefore, these services are fundamentally covered within the main 'means' clause of the definition - The deletion of the phrase 'setting up of a factory' from the subordinate 'includes' clause does not render such services ineligible, as their eligibility is already secured by the main definition - So long as a service is covered by the 'means' part and is not specifically barred by the 'excludes' part of the definition, credit is admissible - The services used in setting up a factory are unambiguously covered as 'input services' as they are activities directly 'in relation to' manufacture - The services used for setting up a factory remain eligible for CENVAT credit even after the amendment effective from 01.04.2011 - the impugned order confirming the demand of CENVAT credit along with interest and penalty is set aside – The appeal is allowed - Whether the invocation of the extended period of limitation and the imposition of penalty is justified – HELD - the issue of invoking the extended period of limitation and imposing a penalty does not survive for consideration. The primary issue of law regarding the eligibility of CENVAT credit was settled in favour of the appellant. The entire dispute stemmed from a matter of legal interpretation of an amendment to the CENVAT Credit Rules, 2004, which indicated a scope for differing interpretations. Having allowed the appeal on the main issue of credit eligibility, the consequential questions regarding the extended time limit and penalty become academic and were consequently set aside.
Download File
show more Judgements  

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Weekly Summary

VIL Video

GST changes in July '25
By Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?