2017 (5) TMI 90 - AT - Central Excise

Water Supply for Plant Pipelines qualifies as 'Input Service' under Cenvat Credit Rules

The Tribunal allowed the appeals filed by the appellants, ruling that the service for laying pipelines for water supply to the plant qualifies as an ... CENVAT credit - scope of input service - laying of the pipelines - whether the service received in relation to laying of the pipelines from Matrikundia Dam to Dariba for water supply to plant at Dariba are covered under the scope of definition of ‘input service’ as provided u/r 2(l) of CCR, 2004? - Held that: - an identical issue has come up for the earlier period in the appellant’s case M/s Hindustan Zinc Ltd. Versus CCE & ST, Udaipur [2016 (7) TMI 1064 - CESTAT NEW DELHI], where it was held that water is essential in the manufacturing process, the pipelines are exclusively used for transport of water for the said purpose, the scope of input services as given under Rule 2 (l) of CCR, 2004 is not restricted to the location of the factory premises alone - appeal allowed - decided in favor of appellant. Issues:1. Whether the service received for laying pipelines for water supply to a plant is covered under the definition of 'input service' as per Cenvat Credit Rules, 2004.Analysis:The judgment pertains to appeals against Orders-in-Original dated 28.11.2013 and 27.11.2013 concerning the period from March 2009 to July 2009 and December 2009 to December 2010, respectively. The appellants were involved in the manufacture of zinc and lead concentrates, where ore concentration was done at a facility in Dariba. The dispute revolved around whether the service for laying pipelines from Matrikundia Dam to Dariba for water supply to the plant qualifies as an 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004. The department disallowed this service, leading to the appeals by the appellants.The Tribunal considered a similar issue in a previous case and observed that the service tax credit paid for services related to laying pipelines for water transportation to the manufacturing unit is eligible. The Tribunal highlighted that the scope of 'input services' is not limited to the factory premises alone. It referenced a case where the Hon'ble Bombay High Court emphasized the broad and comprehensive definition of 'input service' under Rule 2(l), covering services used directly or indirectly in or in relation to the manufacture of final products. The Tribunal concluded that the service for laying pipelines for water supply is essential in the manufacturing process and, therefore, falls within the ambit of 'input service.'Based on the previous order and the legal interpretation provided, the Tribunal set aside the impugned order and allowed the appeals filed by the appellants. The judgment emphasized the inclusive nature of 'input services' and the importance of water supply in the manufacturing process, ultimately ruling in favor of the appellants.In conclusion, the Tribunal's decision in this case clarifies the eligibility of service tax credit for services related to laying pipelines for water supply to a manufacturing unit. The judgment underscores the broad interpretation of 'input service' under the Cenvat Credit Rules, emphasizing the relevance of services used directly or indirectly in the manufacturing process.