AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1439
X X X X Extracts X X X X
X X X X Extracts X X X X
....mill plant are not entitled for the Cenvat Credit under rule 2(l) of the Cenvat Credit Rules, 2004? 2. Whether on the facts and circumstances of the case, the CESTAT is correct in rejecting the appeal on the ground that in order to qualify under the definition of input service, the service has to be received in the factory of production? 3. Whether on the facts and circumstances of the case, the Appellate Tribunal is correct in rejecting the appeal of the Appellants on the ground that the services received in respect of generation of electricity a non excisable product which is used in or in relation to the manufacture of dutiable products, are not entitled for Cenvat credit?" 4. Brief facts of the case are that the appellant was engaged in manufacture of alloy products falling under Chapter 74 of Central Excise Tariff Act, 1985 (For short "the Act,1985") at its factory at Plot No. 21/3, GIDC Industrial Estate, Shanket Tekri, District Jamnagar, Gujarat. 5. The appellant was availing Cenvat Credit of inputs, capital goods and input services under the provisions of the Act and under the Cenvat Credit Rules, 2004 (For short "the Rules"). The appellant was regul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icity with the help of the windmills within the factory premises, there should be no doubt about extending service credit tax claimed by them. In this case, the electricity is being generated in wind mills far away from the factory premises. The electricity as such is not excisable. The electricity is generated by them at place away from the factory. The electricity generated by them is surrendered to the Electricity Board. The quantum of electricity which is going to be used by them need not be exact quantity of electricity produced in their windmills. The services used at the site of the windmills cannot be held as input services by the unit in Jamnagar. As electricity is not excisable, the cenvat credit is not available even at the premises of the windmills. Cenvat credit claimed is inadmissible and the order of the Commissioner in this regard deserves to be upheld." 12. Learned advocate Mr. Anand Nainawati appearing for the appellant submitted that the respondent authorities and the Tribunal have committed an error by not allowing Cenvat Credit only on the ground that the electricity was being generated in Wind Mills far away from the factory premises and as electricity is n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....visions of the Rules. 16. Reliance was also placed on Circular No. 97/8/2007-S.T. dated 23.08.2007 more particularly, clause 8.3 thereof in which doubt raised regarding the admissibility of the Cenvat Credit on service tax paid in respect of mobile phones was answered to the effect that in the Rules, no condition has been prescribed with regard to admissibility of credit of service tax only on telephone connection installed in the business premises. It was therefore, submitted that similarly, for the electricity utilised for manufacturing by the appellant provided by GEB against supply of electricity generated by Windmills, the appellant was entitled to the credit of service tax. 17. Per contra, learned advocate Mr. Ankit Shah for the respondent reiterated the contentions raised before the Tribunal and submitted that there is no connection between the electricity generated at the place of installation of Windmills by the appellant and the manufacturing activity taking place at its factory as the electricity is being received through GEB. It was pointed out that the electricity itself is not excisable and therefore, service tax credit is rightly rejected by the Tribunal. 18....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) of the Rules would also include any service used by a provider of taxable services for providing an output service, or used by the manufacturer, whether directly or indirectly, in relation to the manufacture of final products and clearance of final products from the place of removal. 20. In the facts of the case, the appellant has utilised the electricity supplied by GEB against the electricity generated by Windmills and therefore, service tax paid by the appellant on the installation, erection and services in connection with maintenance of the Wind Mills are exclusively used in relation to manufacturing activity and therefore, the same would be squarely covered under the definition of "input service", as the management, maintenance and repair of Windmills installed by the appellant would fall within "input service" as defined by clause (l) of Rule 2 read with Rule 4 of the Rules which provides that any input or capital goods received in factory or any input services received by the manufacturer of final product would be susceptible to Cenvat Credit. 21. It is pertinent to note that there is no provision in the Rules which stipulates that input services received by the manu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9; and 'in or in relation to' are words of width and amplitude. The subordinate legislation has advisedly used a broad and comprehensive expression while defining the expression 'input service'. Rule 2(1) initially provides that input service means any services of the description falling in subclauses (i) and (ii). Rule 2(1) then provides an inclusive definition by enumerating certain specified services. Among those services are services pertaining to the procurement of inputs and inward transportation of inputs. The Tribunal, proceeded to interpret the inclusive part of the definition and held that the Legislature restricted the benefit of Cenvat credit for input services used in respect of inputs only to these two categories viz. for the procurement of inputs and for the inward transportation of inputs. This interpretation which has been placed by the Tribunal is ex facie contrary to the provisions contained in Rule 2(1). The first part of Rule 2(1) inter alia covers any services used by the manufacturer directly or indirectly, in or in relation to the manufacture of final products. The inclusive part of the definition enumerates certain specified categories of se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....provided on services to windmills installed and situated away from the factory premises. The second question was whether electricity generated on two different places far away could be said to have been used for manufacture of the final product of the assessee in its factory at Aurangabad. 18. So far as the second substantial question of law is concerned, it was answered in the affirmative in the light of the stand taken that admittedly, such electricity generated at those two different locations was adjusted to the electricity used in the factory at Aurangabad and this adjustment was admitted by the Revenue and accordingly, the second question was answered in favour of the assessee. In the case on hand also, in the show cause notice, the adjudicating authority does not dispute the fact that equivalent quantity, that is, the quantity generated is the same as the quantity drawn by the assessees from the TNEB grid. On the first question of law, with regard to the availment of cenvat credit on input services, the Hon'ble Supreme Court referred to the decisions of the High Court of Bombay in the case of Commissioner of Central Excise, Nagpur v. Ultratech Cement, 2010 (20) ....