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2025 (11) TMI 1547
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.... "i) Whether on the facts and circumstances of the case, the CESTAT is correct in holding that the services received in respect of operation, maintenance, erection, commissioning and installation of captive wind mill plant are not entitled for the Cenvat Credit under rule 2(I) of the Cenvat Credit Rules, 2004? ii) Whether on the facts and circumstances of the case, the CESTAT is correct in rejecting the appeal of the appellant 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? iii) Whether on the facts and circumstances of the case, the CESTAT is correct in rejecting the appeal of the Appellants on the ground that the services received in respect of generation of electricity 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 is a company having its factory at Himmatnagar and is engaged in the manufacture of Cotton Yarn which attracts excise duty. The appellant avails Cenvat Credit of input, capital goods, and input services. 5. The appellant had set up a wind far....
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....se of the appellant that on the basis of these certificates, the appellant has been allowed to utilize the specified number of units of electricity at its factory in relation to manufacturing and other related operations, and no electricity charges or duties have been recovered from the appellant on these units of electricity under the above policy. 9. However, a Show Cause Notice came to be issued by the Joint Commissioner of Central Excise on 12.03.2008 proposing to deny the Cenvat credit of Rs. 6,26,013/- along with penalty under Rule 15(4) of the Cenvat Rules being availed by the appellant on the erectioning and commissioning services received at the windmill site during the period from April 2004 to June 2007 and stating that the services received at the windmill site were not input services in as much as the electricity generated at the windmill site was not used in the manufacture of dutiable products and the windmill farm was located at a distance from the factory premises of the appellant. 10. The appellant filed a reply to the above Show Cause Notice submitting that the services received at the windmill site are input services as such services were used in the proce....
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....ommon order as the issue involved is identical. 2. Both the appellants are engaged in the manufacture of excisable goods and have installed one wind mill for generation of electricity at a long distant place from their factory. The issue under consideration relates to availment of cenvat credit of service tax paid in relation to the services utilised for wind mill farm project. The same stands denied to the appellants on the ground that wind mill as also the factory are two independent units, one engaged in manufacture of excisable goods and the other for generating electricity. As such the services obtained at the wind mill cannot be held to be input services so as to allow the cenvat credit of service tax. 3. The details of the matter are not being gone into in as much as both sides agree that identical issues stand decided by the Tribunal in the precedent decisions. Reliance in this regard is made to the Tribunal's decision in the case of Rajans Metals Pvt. Ltd. Vs. CCE Rajkot reported in 2007 (8) STR 498 (Tri. Ahmd.). The learned advocates appearing for the appellants fairly agree that the said decision of the Tribunal stands subsequently followed in numbe....
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.... Parry Engg. & Electronics P. Ltd. v. C.C.E. & S.T., Ahmedabad-I,II,III reported in 2015(40) S.T.R. 243 (Tri.-LB) 5) Endurance Technologies P. Ltd. v. Commr of C. Ex., Aurangabad reported in 2011 (273) E.L.T. 248 (Tri.-Mumbai) 17. It was submitted that this Court in case of Excel Crop Care Ltd.(supra) after considering the provisions of the Act and the Rules and more 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. 18. 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 i....
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....service, - (i) used by a provider of taxable service for providing an output service, or (ii) 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, and includes services used in relation to setting up, modernization, renovation or repairs 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 appe....
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....ds received in the factory or any input service received by manufacture of final product would be susceptible to CENVAT credit. Rule does not say that input service received by a manufacturer must be received at the factory premises. The judgments referred to above, also interpret the word "input" service in similar fashion. In the case of Commissioner of Central Excise, Nagpur 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.....
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....s and the storage and use of ammonia is an intrinsic part of that process." 6. In view of this discussion, we have no hesitation to hold that the answer to question No. (1) is in affirmative. Despite this settled position, learned counsel for the appellant tried to submit that the judgment cited at Sr. No. (2) is being challenged before Supreme Court. This submission does not 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 credi....
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....ed in or in relation to manufacture of final product, but also includes various services used in relation to business of manufacture of final product. Further, the expression "activities" in relation to business was also discussed in the said decision following the decisions of the Apex Court. xxx 25. As already pointed out, there is no dispute that the electricity 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 th....