Input service credit for windmill-generated electricity used in factory manufacture was held admissible under Cenvat rules.

Services used at a windmill outside the factory for generating electricity consumed in manufacture were treated as input services under Rule 2(l) read with Rule 3 of the Cenvat Credit Rules, 2004, because the rules allow credit for services used directly or indirectly, or in relation to manufacture, and do not require exclusive use within the registered factory premises. The Tribunal also noted that prior decisions had allowed credit on identical facts. Reliance on Maruti Suzuki was held inapplicable because it concerned inputs, not input services, so denial of Cenvat credit was unsustainable.

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Issues: Whether service tax credit on services used in a windmill outside the factory, for generating electricity consumed in the factory, qualified as input service for cenvat credit.

Analysis: Rule 2(l) of the Cenvat Credit Rules, 2004 read with Rule 3 permits credit of services received by the manufacturer for use directly or indirectly, or in relation to the manufacture of final products. The rules do not require that such services be used exclusively within the registered factory premises. The disputed services were used at the windmill for generation of electricity, and that electricity was in turn used in the factory for manufacture of excisable goods. On identical facts, credit had been allowed in prior Tribunal decisions. The reliance on Maruti Suzuki was held inapplicable because that case concerned inputs, not input services.

Conclusion: The disputed services were input services eligible for cenvat credit, and the denial of credit was unsustainable.

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