2008 (4) TMI 278 - AT - Service Tax

Appellate Tribunal allows Cenvat credit on service tax for power plant operations

The Appellate Tribunal CESTAT AHMEDABAD allowed the appeal, ruling that the Cenvat credit on service tax paid for man power supply and operation of a ... Cenvat credit admissibility - input services for power plant - credit on inputs and capital goods for captive power generation used in manufacture of excisable goods - restriction on credit where service used exclusively for exempted goods or services under Rule 6(5) of Cenvat Credit Rules, 2004 - service tax on manpower supply and operation and maintenance servicesCenvat credit admissibility - service tax on manpower supply and operation and maintenance services - input services for power plant - credit on inputs and capital goods for captive power generation used in manufacture of excisable goods - restriction on credit where service used exclusively for exempted goods or services under Rule 6(5) of Cenvat Credit Rules, 2004 - Admissibility of Cenvat credit on service tax paid for manpower supply to the power plant and for operation and maintenance of the power plant where electricity generated is used in the manufacture of excisable goods. - HELD THAT: - The Tribunal examined the claim for Cenvat credit on services of manpower supply and operation and maintenance of the captive power plant. The Commissioner (Appeals) had taken the view that such input services related to the manufacture of electricity which is not liable to excise and relied on Rule 6(5) of the Cenvat Credit Rules, 2004, which denies credit where a service is used exclusively in relation to exempted goods or services. The Tribunal noted the settled position that credit on inputs and capital goods used for setting up a power plant by a manufacturer for generating electricity to enable or assist the manufacture of excisable goods is admissible. Applying that principle, the Tribunal held that the services in question are input services used in relation to manufacture of excisable goods and therefore Cenvat credit on the service tax paid for manpower supply and for operation and maintenance of the power plant is allowable. The contrary view recorded by the Commissioner (Appeals) was not sustained.The appeal is allowed and Cenvat credit on the service tax paid for manpower supply and for operation and maintenance of the power plant is held admissible.Final Conclusion: Cenvat credit on service tax paid for manpower supply and for operation and maintenance of a captive power plant, where the electricity generated is used in the manufacture of excisable goods, is admissible; the appeal is allowed. The Appellate Tribunal CESTAT AHMEDABAD allowed the appeal regarding the admissibility of Cenvat credit on service tax paid for man power supply and operation of a power plant used to generate electricity for manufacturing goods not liable to excise duty. The benefit of Cenvat credit on these services was deemed admissible.