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2025 Supreme(Online)(CESTAT) 19
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
P.A. Augustian, Judicial Member, Pullela Nageswara Rao, Technical Member
Zuari Cement Limited – Appellant
Versus
Commissioner of Central Tax & Central Excise – Respondent
Central Excise Appeal No. 20591 of 2022
For the Appellants/Petitioners: Ms. Meghna Lal, Ms. Vani Dwevedi
For the Respondents: Mr. Rajashekhar. B. N. N
CENVAT credit eligible on land lease, pre-production, ISD, event, repainting services integral to or in relation to manufacture under Rule 2(l).
Headnote:The Central Excise Act, 1944 and Rule 2(l) of CENVAT Credit Rules, 2004 define input services broadly as services used directly or indirectly in or in relation to manufacture, with exclusions post-01.04.2011 for construction-related services. Appellant, a cement manufacturer, availed CENVAT credit on service tax for land lease from port trust, pre-production services, ISD-distributed credits, event management, and repainting, challenged as ineligible by the Commissioner who confirmed demand and penalty via Order-in-Original dated 25.05.2022. Tribunal found credits eligible due to nexus with manufacturing activities. Issues framed around eligibility of credits on land lease for factory setup, pre-commencement services, ISD marketing credits, business event services, repainting works, and limitation. Ratio: 'In or in relation to manufacture' encompasses land lease and setup services as indispensable for production; ISD recipient not liable for distributor's eligibility; event management for business promotion qualifies; repainting not excluded civil construction; no suppression for extended limitation. Appeal allowed; impugned order set aside with consequential relief.
| Table of Content |
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| 1. appeal against demand for ineligible cenvat credits on input services. (Para 2 , 3) |
| 2. land lease qualifies as input service under broad 'in relation to manufacture' definition post-2011. (Para 4 , 5 , 6 , 7) |
| 3. pre-production services with manufacturing nexus eligible for cenvat credit. (Para 8 , 9) |
| 4. isd recipient not liable for credit eligibility disputes. (Para 10 , 11) |
| 5. event management for business promotion qualifies as input service. (Para 12) |
| 6. repainting works not excluded civil construction. (Para 13) |
| 7. no suppression justifies extended limitation. (Para 14 , 15) |
| 8. all disputed credits eligible; appeal allowed, order set aside. (Para 16 , 17 , 18 , 19) |
Per: P.A. Augustian
This appeal is filed against Order-in-Original No. COC-EXCUS-000-COM-08/2021-22/CE/Commr dated 25.05.2022 passed by the Commissioner of Central Tax & Central Excise, Kochi.
2. The issue in the present appeal is regarding demand against ineligible CENVAT credit availed by the Appellant.
3. The brief facts are M/s. Zuari Cement Limited the Appellant is a manufacturer of cement and started the activity of packing cement in Cochin in October 2015. Appellant has also obtained Service Tax Registration under various service categories. During multi location Audit by the Additional Director General Audit for the year 2016-2017, it is observed that Appellant has not paid central excise duty correctly for the MRP based clearances and also availed ineligible CENVAT Credit of input services. During the course of audit, Appellant paid the alleged short payment and reversed the amount in the CENVAT account. However, has not paid interest and penalty on the short payment. Further, it is alleged that Appellant has availed ineligible CENVAT credit of input services on the strength of invoices issued by service providers and started utilizing this credit for the payment of central excise duty for the clearance made from October 2015 onwards. Further, out of the total amount of Rs. 6,54,97,114/- of ineligible CENVAT credit, an amount of Rs. 6,18,00,000/- pertains to the service tax paid on the upfront charges for the lease rent of land taken from Cochin Port Trust for setting of a factory in Willingdon Island. Since the said credit is taken while setting up the unit, alleging various omissions, show cause notices were issued and Adjudication authority as per the impugned order confirmed the demand. Aggrieved by said order, present appeal is filed before the Tribunal.
4. When the appeal came up for hearing, as regards the allegation of ineligible CENVAT credit availed by the Appellant on lease premium, the Learned Counsel for the Appellant submits that as per the definition of input services as it stood both prior to and post amendment in 2011, even though the services used for construction of a building or a civil structure or a part thereof or laying of foundation or making of structures for support of capital goods, were excluded from the definition of input service w.e.f. 01.04.2011, it is very pertinent to note that the "means" portion of the definition of input service has not undergone any change by virtue of the aforesaid amendment. Thus, the services procured by the Appellant will qualify as an input service in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 as it squarely falls within the ambit of the means portion of the said definition, itself.
5. Learned Counsel further submits that the scope of the term "in or in relation to", as mentioned in the definition of "input service is very wide and expansive. The Hon'ble Supreme Court in the case of Collector of Central Excise Vs. Rajasthan State Chemical Works reported in [1991 (55) E.L.T. 444 (S.C.)] has held that in the process of manufacture or in relation to manufacture implies not only the production but the various stages through which the raw material is subjected to change by different operations. It is the cumulative effect of the various processes to which the raw material is subjecte
