Tribunal Allows Cenvat Credit for Windmill Services

The Tribunal upheld the Respondent's entitlement to Cenvat Credit for service tax paid towards repair and maintenance services used in windmills located away from the factory, emphasizing the indirect relationship between the services availed and the manufacturing process at the factory. The Tribunal referred to a previous ruling and dismissed the Revenue's appeal, allowing the Respondent to avail consequential benefits in accordance with the law.

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Issues:
- Availment of Cenvat Credit for service tax paid towards repair and maintenance services used in windmills located far away from the factory.
- Interpretation of the relationship between the services availed and manufacturing activity.
- Application of CCR, 2004 provisions regarding credit eligibility.
- Dispute over the denial of Cenvat credit by Revenue and appeal against the order in appeal.

Analysis:
1. The Respondent, engaged in manufacturing ceramic tiles, availed Cenvat Credit for service tax paid towards repair and maintenance services used in windmills located at a distance from the factory. The Revenue appealed against the allowance of this credit, arguing that the services had no relationship with the manufacturing activity at the factory, contravening CCR, 2004 provisions.

2. The Revenue contended that the electricity generated by the windmills was injected into the power grid and later used at the factory, asserting that the services at the windmills did not contribute to the manufacturing process. The Revenue urged for setting aside the Order-in-Appeal and restoring the Order-in-Original based on these grounds.

3. The Tribunal noted the existence of a tripartite 'wheeling and banking agreement' between the company, 'Suzlon Energy Limited,' and 'Jaipur Vidyut Vitran Nigam Limited (JVVNL).' This agreement allowed the company to set up windmills for power generation, injecting power into the grid maintained by JVVNL in exchange for drawing power at their factory.

4. The Tribunal highlighted the agreement's clauses on wheeling and banking of energy, meter reading procedures, sealing and maintenance of meters, and billing provisions. It emphasized that the company was indirectly receiving power at their factory from the grid, a crucial factor of production for manufacturing, supporting the eligibility for Cenvat credit as ruled in a previous case.

5. Referring to the ruling in Parry Engg. & Electronics P. Ltd, the Tribunal concluded that the dispute was covered by precedent. It dismissed the Revenue's appeal, allowing the Respondent to avail consequential benefits in accordance with the law.

In conclusion, the Tribunal upheld the Respondent's entitlement to Cenvat Credit for service tax paid towards repair and maintenance services used in windmills located away from the factory, emphasizing the indirect relationship between the services availed and the manufacturing process at the factory.

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