2015 (1) TMI 543 - AT - Central Excise

Tribunal allows CENVAT Credit for off-site services aiding cement production

The Tribunal upheld the respondent assessee's entitlement to CENVAT Credit for services related to a fly ash handling plant outside the cement ... CENVAT Credit - erection, commissioning of fly ash handling plant - Held that:- services of Fly Ash Handling Plant set up by the respondent assessee has been used by it in procuring its raw material being flay ash for the purpose of manufacture of its end product being cement. Thus, the expenses incurred at the Handling Plant are in the nature of expenditure for the purpose of manufacture of its end product and in such circumstances, the services availed by the respondent assessee at the fly ash handling plant are inputs services eligible within the meaning of Rule 2(l) of Cenvat Credit Rules, 2004 for the purpose of manufacture of its final product. Further, the issue is covered by the earlier rulings of this Tribunal in the case of Ultratech Cement (2010 (7) TMI 302 - CESTAT, MUMBAI). - Decided against Revenue. Issues:Revenue's appeal against setting aside of Order-in-Original regarding CENVAT Credit on services for fly ash handling plant located outside the cement plant.Analysis:The case involved the Revenue appealing against the setting aside of an Order-in-Original by the Commissioner of Customs & Central Excise (Appeals), Nagpur, regarding the availing of CENVAT Credit by the respondent assessee on services related to a fly ash handling facility situated outside the cement manufacturing plant. The Revenue contended that as per Rule 2(l) of Cenvat Credit Rules, 2004, credit of services for setting up, repair, and maintenance is restricted to services utilized within the factory premises only. The Revenue also argued that the fly ash handling facility not being part of the manufacturer's premises, the CENVAT Credit was not permissible. Additionally, the Revenue raised concerns about the reliance on a Supreme Court ruling regarding credit for inputs used in a factory situated away from mines. The Revenue further highlighted the agreement clause allowing the supply of fly ash to small users within a 100 km radius, indicating that the fly ash plant was not captive. The Revenue cited a Tribunal ruling on services used at a windmill site not within factory premises to support its position.The respondent assessee, on the other hand, argued that the matter was settled by a previous Tribunal order and relied on a case involving Ultratech Cement Ltd. The respondent emphasized that Rule 2(l) of Cenvat Credit Rules, 2004 did not explicitly exclude input service credit for services used outside factory premises. Referring to a Tribunal ruling on repair and maintenance of a River Pump outside the factory premises, the respondent contended that input services indirectly connected to manufacturing were eligible for credit. The respondent also cited a Bombay High Court ruling in support of their argument.The Tribunal, after considering the arguments, found that the services at the fly ash handling plant were used to procure raw material for cement manufacturing, making them input services eligible for CENVAT Credit under Rule 2(l) of Cenvat Credit Rules, 2004. The Tribunal relied on previous rulings involving Ultratech Cement Ltd. to support its decision. Consequently, the Revenue's appeal was dismissed. Additionally, an initial appeal filed by the Revenue was deemed infructuous due to a procedural defect and dismissed accordingly.