2011 (7) TMI 505 - AT - Service Tax

Tribunal allows appeals on CENVAT credit for service tax paid on wind mill input services

M/s Maharashtra Seamless Ltd. Versus Commissioner of Central Excise, Raigad

M/s Maharashtra Seamless Ltd. Versus Commissioner of Central Excise, Raigad - 2012 (25) S.T.R. 167 (Tri. - Mumbai), [2012] 34 STT 493 (MUM - CESTAT), 2012 ... Issues:- Eligibility of CENVAT credit on service tax paid on input services used at a wind mill for manufacturing excisable goods.- Interpretation of the definition of 'input service' under Rule 2(l)(ii) of Cenvat Credit Rules, 2004.- Nexus between the input services used and the manufacture of final products.- Applicability of CENVAT credit rules regarding input services used at a different location.- Comparison of relevant tribunal and high court decisions.Analysis:The appeals were filed against the Order-in-Appeal upholding the lower adjudicating authority's decision regarding the eligibility of CENVAT credit on service tax paid on input services used at a wind mill for manufacturing excisable goods. The main issue was whether the input services used at a different location could be considered for CENVAT credit. The appellant argued that the electricity generated at the wind mill was essential for manufacturing their final product, establishing a nexus between the input services and the manufacturing process. They relied on tribunal and high court decisions to support their contention.The definition of 'input service' under Rule 2(l)(ii) of Cenvat Credit Rules, 2004 was crucial in determining the eligibility of CENVAT credit. The rule encompassed services used directly or indirectly in or in relation to the manufacture of final products, including services integral to the business of manufacturing final products. The tribunal emphasized that the definition covered services with a direct nexus to the manufacturing process, supporting the appellant's argument regarding the input services used at the wind mill.The tribunal highlighted that there was no legal requirement for input services to be used solely at the manufacturing factory, unlike inputs. Relevant rules were cited to illustrate this point. The tribunal also referenced previous decisions, such as the case of Ultratech Cement Ltd., which emphasized the importance of services integrally connected to the business of manufacturing final products. The tribunal found the department's argument regarding the quantity of electricity received at the factory to be irrelevant, as it was not a point raised in previous proceedings.Ultimately, the tribunal concluded that the order of the Commissioner (Appeals) was not sustainable in law and set it aside, allowing the appeals. The decision was based on the interpretation of the definition of 'input service' and the established nexus between the input services used at the wind mill and the manufacturing of final products. The tribunal's analysis focused on the legal framework and relevant precedents to reach a decision favorable to the appellant.