Availment of Cenvat Credit of tax paid on Repairs and Maintenance services for Wind mill as Input services

[samiuddin ansari]

First of all thanks ! for inviting query on issues related to GST and other related matter, however, my query related to CENVAT credit of service tax paid on input services. One unit namely, "X: engaged in the manufacture of ball bearings falling under Chapter 82 of the Central Excise Tariff Act, 1985. The unit is also availing and utilizing cenvat credit of service tax paid on input services related to Repairs and Maintenance of Wind mill owned by the above unit, generating electricity which in turn is being collected by state owned electricity grid located at far flung area from the registered factory premises and, also set off is being provided in the form of power supply to the factory premises through local grid. Here, my observation is input services are not being used in or in relation to the manufacture of finished goods or in providing output services. In other words, it has no directly or indirectly nexus with manufacture of dutiable goods or provision of taxable output services, not only this it does not qualify the definition provided in Rule 2 of the Cenvat Credit Rules, 2004, as amended for input or input services eligible for availment of Cenvat Credit. My question is as to whether the charges paid for repairs and maintenance services of wind mill would qualifies as Input service for availment of Cenvat Credit of tax paid thereon.

[samiuddin ansari]

Sir,

Also provide details of respective provisions of the rules, Board's clarifications, notifications or case laws in support of above query.

[KASTURI SETHI]

Dear Querist,

The undermentioned case law is based on Supreme Court judgement. Since you are qualified and well conversant with law matters, no need to explain further. Go through the whole judgement. It is relevant for you. Ask, if any doubt.

2017 (52) S.T.R. 408 (Tri. - Del.) = 2017 (2) TMI 715 - CESTAT NEW DELHI HINDALCO INDUSTRIES LTD. Versus COMMISSIONER OF C. EX., ALLAHABAD

 

[KASTURI SETHI]

PARRY ENGG. & ELECTRONICS P. LTD. Versus C.C.E. & S.T., AHMEDABAD-I, II, III- 2015 (40) S.T.R. 243 (Tri. - LB) = 2016 (1) TMI 546 - CESTAT AHMEDABAD

 

AI Summary

Cenvat credit eligibility for windmill repair services questioned where supplied power to external grid lacks nexus to manufacture.
Whether payment of service tax on repairs and maintenance of a windmill supplying electricity to an external grid qualifies as an input service for claiming Cenvat credit hinges on the required nexus between that service and the manufacture of dutiable goods or provision of taxable output services under the Cenvat credit framework; tribunal decisions are cited as relevant precedents.