2010 (9) TMI 126 - AT - Service Tax

Input service credit allowed for repair and maintenance outside factory premises under Cenvat Credit Rules

The Tribunal held that the input service credit for repair and maintenance of the river pump outside the factory premises was admissible as it had a ... Cenvat credit on service tax availed - on repair and maintenance of river pump situated at bank of river to draw water which is used in the captive power plant is not admissible - not admissible - service taken by the respondent outside the factory premises - Held that: - Cenvat credit cannot be denied. Issues:- Admissibility of Cenvat credit on service tax for repair and maintenance of river pump outside factory premises.- Interpretation of Rule 2(l) of the Cenvat Credit Rules, 2004 regarding input service credit eligibility.Analysis:1. The appeal was filed by the Revenue against the Commissioner (Appeals) order regarding the admissibility of Cenvat credit on service tax for repair and maintenance of a river pump outside the factory premises.2. The respondents, engaged in cement manufacturing, availed Cenvat credit on repair and maintenance of a river pump to draw water for their captive power plant. The Revenue contended that the service was not admissible as it lacked nexus with the manufacture of final products. They relied on precedents and challenged the decision of Jaypee Bela Plant's case. The respondents argued that the Jaypee Bela Plant's case decision was applicable, and the lower appellate authority's decision was correct.3. The issue revolved around whether the input service credit was available for the river pump situated outside the factory premises and used for generating electricity for the cement factory. Rule 2(l) of the Cenvat Credit Rules, 2004 was examined, and it was noted that the repair and maintenance of the river pump had a direct nexus with the manufacturing process, making the Cenvat credit admissible. The Tribunal's decision in the respondent's own case supported this view, citing the Apex Court's decision in a similar matter.4. The Judicial Member, after considering both sides' arguments and the legal provisions, concluded that the input service credit for the repair and maintenance of the river pump outside the factory premises was admissible. The final decision in the respondent's own case and the established nexus with the manufacturing process led to the rejection of the Revenue's appeal.This detailed analysis outlines the legal arguments, precedents cited, and the application of relevant rules leading to the final decision on the admissibility of Cenvat credit in this case.