CENVAT credit on wind mill maintenance upheld where generated electricity supported manufacturing operations

CENVAT credit was held admissible on annual maintenance charges for a wind mill situated outside the factory because the wind mill generated electricity used in manufacture. Routing the electricity through the State electricity board did not sever the nexus between the maintenance service and the manufacturing activity. Relying on earlier decisions on similar facts and finding no contrary authority, the Tribunal treated the service tax on wind mill maintenance as creditable and rejected denial of credit.

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Issues: Whether CENVAT credit was admissible on annual maintenance charges paid for a wind mill located outside the factory, where the electricity generated by the wind mill was transmitted through the State electricity board and used in the course of manufacture.

Analysis: The appellant used the wind mill to generate electricity for its manufacturing activity, and the fact that the electricity was routed through the State electricity board did not break the connection between the service and manufacture. The Tribunal relied on earlier decisions allowing CENVAT credit on similar facts and found no contrary decision brought on record to deny the credit. The service tax paid on maintenance of the wind mill was treated as creditable in the course of manufacturing activity.

Conclusion: CENVAT credit on the annual maintenance charges of the wind mill was admissible, and the denial of credit was unsustainable.

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