Input service credit for wind mill maintenance denied; demand upheld, but penalty deleted for bona fide interpretation.

Service tax credit on maintenance and repair services used for a wind mill located away from the factory was held ineligible on the Tribunal precedent relied on by both sides, so the demand and interest were upheld. Penalty was examined separately and deleted because the dispute involved a bona fide interpretation of credit eligibility, making penal action unwarranted on the same precedent.

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Issues: Whether service tax paid on services used for maintenance and repair of a wind mill located away from the factory could be treated as eligible input service for Modvat credit, and whether penalty was sustainable.

Analysis: The demand of service tax credit was held to be covered against the assessee by the Tribunal precedent relied on by both sides, and the confirmation of duty and interest was maintained. The penalty was examined separately and, following the same precedent, was found not warranting imposition in view of the bona fide interpretation of law.

Conclusion: The confirmation of demand and interest was upheld, while the penalty imposed on the assessee was set aside.

Final Conclusion: The appeals succeeded only to the extent of penalty relief, but the substantive tax demand remained confirmed.

Ratio Decidendi: Where the dispute turns on a bona fide interpretation of eligibility for credit, the substantive demand may be sustained while penalty can still be deleted.

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