TaxTMI 
TaxTMI 
2025 (11) TMI 1549
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....n view of the definition of "input service" as provided in Rule 2 of the CENVAT Credit Rules, 2004, whether the Tribunal below committed substantial error of law in holding that CENVAT Credit of service tax paid on services, like installation, commissioning and civil works as well as maintenance for a windmill comes within the purview of Rule 3 of the said Rules. (b) Whether the Tribunal below committed substantial error of law in denying the CENVAT credit of service tax paid on services, like installation and commissioning as well as civil works and maintenance of a windmill only because the windmill was located at a place other than the factory premises and electricity generated at the site of windmill was not excisable." 4. Brief facts of the case are that the appellant is a company situated in Ahmedabad and is engaged in the manufacture of goods like H.R. Coils and C.R. Coils and has installed a Windmill in Kutch District for generating electricity using wind energy. 5. For installation and commissioning of this windmill, the appellant has availed erection, commissioning and installation services on which the Agency providing the above services has paid service t....
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....dit was in contravention of Rules 3(1) and 4(1) of Cenvat Rules. 9. The appellant filed a reply to the above Show Cause Notice. However, the Assistant Commissioner of Central Excise. Division-IV, Ahmedabad-II passed Order-in-Original dated 01.11.2010 thereby confirming that credit of Rs. 2,87,122/- was not admissible to the appellant, and also ordered for appropriation and adjustment of the amount of Rs. 2,87,122/- along with interest of Rs. 12,364/- already deposited by the appellant during the intervening period, and a penalty of Rs. 2,87,122/-. 10. Being aggrieved by the Order-in-Original, the appellant preferred an appeal before the Commissioner (Appeals), Ahmedabad who by Order-in-Appeal dated 19.01.2011 upheld the demand of cenvat credit along with interest but reduced the penalty to Rs.2000/-. The Commissioner (Appeals) while passing the order-in-appeal placed reliance upon the decisions of the Tribunal in cases like Rajhans Metals Pvt. Ltd. (supra) and Atul Auto Ltd. -2009 (237) ELT 102 etc. wherein the Tribunal has held in all such cases that credit of service tax paid on services availed in respect of installation, erecting, commissioning and maintenance of Windmill....
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....ducts up to the place of removal. Therefore, a service can be treated as input service only when it is used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal. 4 In the instant case, the wind mill is located at Kutch and therefore cannot be considered as input service as the same are not used by the manufacturer directly or indirectly. Further more the power generated is an exempted product and different activity altogether and not related to manufacture. Therefore the availment of credit is not sustainable. 5. In fact the issue has been already decided by this Tribunal in the case of M/s. Real Strips Ltd. Vs. CCE Ahmedabad vide order No. A/619/WZB/AHD/2011 dated 25.03.11. The order of the Tribunal clearly denied the service tax credit and upheld the order. I have also gone through the following judgments cited by the learned advocate: 1. Rajhans Metals (P) Ltd. Vs. CCE Rajkot [2007 (8) STR 498 (Tri. Ahmd.)] 2. Atul Auto Ltd. Vs. CCE Rajkot [2009 (237) ELT 102 (Tri. -Ahmd.)] 3. Ellora Times Ltd. Vs. CCE Rajkot [2009 (13) STR....
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....ore particularly, definition of "input service" as defined in Rule 2(l)(i) of the Rules held that mobile service provider, who is liable to pay service tax and recovers the same by adding such service tax in his bill, is the person providing taxable service and is rendering "output service" so as to constitute "input service" in the hands of respondent assessee. It was therefore, submitted that the service tax paid by the appellant on the installation and erection of the Wind Mill is required to be given credit under the provisions 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 the for the electricity utilised for manufacturing by the appellant provided by GEB against supply of electricity generated by Wind Mills, the appellant was entitled to the credit ....
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....airs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;" Rule (4) Conditions for allowing CENVAT credit (1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service." 19. Definition of term "input service" as appearing in Rule 2(l) 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 su....
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....ur v. Ultratech Cement Ltd. [cited supra), the Division Bench of this Court held that the definition of "input service" is very wide and covers not only services which are directly or indirectly used in or in relation to manufacture of final product but also includes various services used in relation to business of manufacture of final product. The expression "activities" in relation to business is also discussed in this judgment by referring to judgment of Apex Court. In the case of Deepak Fertilizers & Petrochemicals Corporation Ltd. v. C.C.Ex. Belapur [cited supra) the Division Bench held as under: "The definition of the expression input service' covers any services used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products. The words 'directly or indirectly' 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) the....
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....t really help us in deciding the appeals. Both appeals are dismissed." 24. Similarly, Hon'ble Madras High Court in case of Ashok Leyland Ltd.(supra) after considering the decision of Bombay High Court in case of Endurance Technology Pvt. Ltd. (supra) held as under: "17. Thus, we are to consider as to whether there has been any nexus between the energy generated and the manufacturing activity of the assessee. This very issue was considered in Endurance Technology Pvt. Ltd. (supra). In fact, we find two substantial questions of law framed for consideration in Endurance Technology Pvt. Ltd. (supra), which are more or less identical to that of the questions of law framed in these appeals. The first question framed for consideration was whether the assessee is entitled to avail Cenvat credit on management, maintenance or repair services 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 q....
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....generated by the windmills are exclusively used in the manufacturing unit for final products, there is no nexus between the process of electricity generated and manufacture of final products and there is no necessity for the windmills to be situated in the place of manufacture. Further, as already noticed, the definition of "input service" is wider than the definition of "input". Furthermore, if one takes a look at the Rules, more particularly Rule 2(k), as it stood prior to 1-4-2011, which defines "input", the following has been specifically inserted. "within the factory of production". However, these words are physically missing in Rule 2(1), which defines "input service" and it would mean any service used by a provider of taxable service for providing an output service or used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal. Though the definition of "input service" has to be widely construed, and in terms of Rule 3, which allows the manufacturer of final products to take the credit of service tax inputs or capital goods received in the factory o....