Order Date – 10 April 2023

Parties: M/s Mangalam Cement Limited Vs Commissioner, Central Goods, Excise & Service Tax

Facts – 

• The Appellant, M/s Mangalam Cement Limited, is engaged in the manufacture of cement and clinker and has been availing cenvat credit on inputs, capital goods and input services under the provisions of Credit Rules, 2004. The appellant had set up another unit, i.e., Manglam Grinding Unit (MGU) and common registration was granted for both the units.
• A show cause notice dated 26.08.2015 was issued for the period October 2013 to February 2014, alleging that the appellant had wrongly availed the cenvat credit on the services used in setting up of the new plant, namely MGU.
• Both the adjudicating authority and the Commissioner disallowed the credit solely on the ground that the definition of 'input service' under Rule 2(l) has been amended w.e.f. 01.04.2011, thereby the words input services relating to 'setting up' have been omitted vide Notification No. 3/2011-CE (NT) dated 01.03.2011. 

Issue – 

• Whether the appellant rightly availed the cenvat credit on input services in connection with setting up of their new unit?

Order – 

• The Tribunal observed that the services utilized for setting up of the factory which were availed prior to the commencement of production shall fall within the “means clause‟ of the definition of “input service‟, which has been held to be wide enough to allow cenvat credit of services used in or in relation to manufacture whether directly or indirectly. There is a direct nexus between the manufacture of the final product & the services used for setting up the grinding unit, MGU.
• Further the Tribunal relied on the case of Commissioner C. Ex. Vs. Manglam Cement Ltd 2017 (47) STR 349, holds that it is well settled position of law that the credit availed by an assessee cannot be denied or varied on the ground that the classification of service should have been made in a different category by the provider of service. Variation in the classification or consequent rate of payment of service tax is not possible at the end of the recipient of service. 
• Hence it was held that once the classification is finalised at the end of the service provider the same cannot be altered at the end of the service recipient. Consequently, the cenvat credit cannot be denied to the appellant on this ground. The appeal is allowed.