Cenvat credit on GTA freight allowed for cement used in mine repairs linked to factory operations

Cenvat credit was held admissible on GTA service used for inward transportation of cement brought into the mines, because the mines were treated as part of the factory area and the cement was used for repair and renovation of cavities to support continued mining activity. Rule 2(l) of the Cenvat Credit Rules, 2004 was applied broadly to cover services used directly or indirectly in relation to manufacture, including services connected with setting up, modernization, renovation or repairs of the factory. The freight therefore had a sufficient nexus with manufacture and factory repairs, and the Revenue's challenge failed.

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Issues: Whether Cenvat credit was admissible on GTA service used for inward transportation of cement brought into the mines for repair and renovation of cavities, where the mines formed part of the factory area.

Analysis: Rule 2(l) of the Cenvat Credit Rules, 2004 defines input service broadly to include services used by a manufacturer directly or indirectly in or in relation to the manufacture of final products, as well as services used in relation to setting up, modernization, renovation or repairs of the factory. The mines were treated as part of the factory area, and the cement was used for repair and renovation within the mines to enable further mining activity. On that basis, the freight paid for bringing cement inside the premises had a sufficient nexus with manufacture and factory repairs.

Conclusion: Cenvat credit on the GTA service was admissible and the Revenue's challenge failed.

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