TaxTMI 
TaxTMI 
2025 (11) TMI 1936
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....ding that the services received in respect of operation, maintenance of captive wind mill plant are not entitled for the Cenvat credit under rule 2(1) of the Cenvat Credit Rules, 2004? (2) Whether on the facts and circumstances of the case, the CESTAT is correct in rejecting the appeal of the appellants on the ground that in order to qualify under the definition of input service, the service has to be received in production? the factory of (3) 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 engaged in the manufacture of electronic products falling under Chapters 85 and 91 of the Central Excise Tariff Act, 1985. The products manufactured by the appellants attract excise duty. The appellants have its factory at Morbi. 5. The appellant had set up a wind farm at village Bhogat which is approximately 225 km away from the factory premises. The appe....
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....hat the services received at wind farm will not qualify as input service since the electricity generated at wind farm is not used in the manufacture of dutiable products and such electricity is supplied to GEB under the agreement. It was further held that the electricity used in the manufacture of dutiable product is purchased from GEB under the separate agreement and that no manufacturing activities are undertaken at wind farm. Hence the services received at wind farm will not be eligible for credit as input services. Accordingly, the adjudicating authority has confirmed the denial of Cenvat credit of Rs. 1,25,110/ and also imposed penalty of equal amount under Rule 15(3) of the Cenvat Rules read with Section 11AC of the Act. 11. Being aggrieved, the appellant preferred an appeal before the Commissioner (Appeals), Central Excise, Rajkot who vide order-in-appeal dated 12.12.2007 upheld the order-in-original. 12. Being aggrieved, the appellant preferred an appeal before the Tribunal. 13. The Tribunal vide impugned Final order dated 29.04.2008 dismissed the appeal observing as under: "11. After a detailed consideration of all the points raised by both the parties, I....
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....n the power generated through Wind Mills and the goods manufactured as three activities i.e sale, supply and consumption takes place immediately even though place of generation and manufacturing are different and therefore, the appellant is entitled to avail the credit of service charges incurred in relation to the Wind Mills. In support of his submission, reliance was placed on the following decisions: 1) Commissioner of Central Excise v. Excel Crop Care Ltd. reported in 2018 (12) STR 436 (Guj.). 2) C.C.E. & Cus., Aurangabad v. Endurance Technology Pvt. Ltd. reported in 2017 (52) S.T.R. 361 (Bom.) 3) Commissioner of C. Ex. & S.T., Chennai v. Ashok Leyland Ltd. reported in 2019(369) E.L.T. 162 (Mad.) 4) 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)....
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....ng and installation agency, in relation to, (1) erection, commissioning or installation of plant, machinery or equipment; or (ii) installation of (a) electrical and electronic devices, including wirings or fittings therefor; or (b) plumbing, drain laying or other installations for transport of fluids; or (c) heating, ventilation or air conditioning including related pipe work, ductwork and sheet metal work; or (d) thermal insulation, sound insulation, fire proofing or water proofing; or (e) lift and escalator, fire escape staircases or travelators; or (f) such other similar services;" Cenvat Credit Rules, 2004 : "Rule 2(l)"input service" means any 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 modernization, setting renovation up, or repairs of a factory, premises of provider of output service or an office relating to suc....
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.... rendering output service so as to constitute input service in the hands of the assessee and therefore, the ground on which the credit was disallowed as the phones were not installed in the factory premises was held to be a ground not germane provisions of the Rules. to the 23. The Hon'ble Bombay High Court in case of Endurance Technology Pvt. Ltd.(supra) on similar issue of allowability of Cenvat Credit on electricity generated from the Windmills has held as under: "5. On perusal of these Rules, it becomes clear that the management, maintenance and repair of windmills installed by the respondents is input service as defined by clause "I" of Rule 2. Rule 3 and 4 provide that any input or capital goods 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 t....
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....ver as we have noted earlier, whereas Rule 3(1) manufacturer of final products to take credit of excise duty and Service Tax among others paid on any input or capital goods received in the factory of manufacturer of the final product, insofar as any input service is concerned, the only stipulation is that it should be received by the manufacturer of the final product. This must be read with the broad and comprehensive meaning of the expression 'input service' in Rule 2(1). The input services in the present case were used by the appellant whether directly or indirectly, in or in relation to the manufacture of final products. The appellant, it is undisputed, manufactures dutiable final products 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 Mad....
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....of Rule 2. It was held that Rules 3 and 4 provide that any input or capital goods received in the factory or any input service received for manufacture of final product would be susceptible to Cenvat credit. Further, it was held that Rule does not say that input service received by a manufacturer must be received at the factory premises and the decisions relied on also interpret the word "input service" in similar fashion. 19. Further, by referring to the decision in Commissioner of Central Excise, Nagpur v. Ultratech Cement, 2010 (20) S.T.R. 589 (Bom.) (supra), it was 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. 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 be....