TaxTMI 
TaxTMI 
2026 (1) TMI 574
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....e Commissioner of Central Excise, Madurai, whereby proceedings initiated against M/s. The Ramco Cements Limited (formerly M/s. Madras Cements Limited), Virudhunagar (hereinafter referred to as "the respondent/assessee") were dropped. 2.1 The respondent is engaged in the manufacture of cement falling under Chapter Heading 25 of the Central Excise Tariff Act, 1985 and had availed CENVAT credit on inputs, capital goods and input services in terms of the CENVAT Credit Rules, 2004. 2.2 During the period from November 2005 to March 2011, the respondent availed CENVAT credit of service tax amounting to Rs.3,22,90,726/- paid on maintenance and repair services of windmills located outside the factory premises. Electricity generated from such w....
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.... 4.1 The adjudicating authority erred in dropping the demand merely by relying on earlier decisions without recording independent findings. 4.2 It was argued that windmills are located far away from the factory premises and electricity generated therein has no direct nexus with the manufacture of cement, as the power is fed into the grid and only accounting adjustments are made. 4.3 Reliance was placed on the proposition that decisions accepted on monetary limits do not constitute binding precedents in terms of Section 35R of the Central Excise Act, 1944. 4.4 Finally, she contends and prays to set aside the impugned order to restore the demand with interest and penalty. 5.1 The Ld. Consultant for the respondent submitted that....
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....ses is admissible under Rule 2(l) of CCR, 2004? ii. Whether re-credit taken in January 2017 pursuant to the Tribunal's Final Order dated 25.02.2015 is legally sustainable? iii. Whether the adjudicating authority was justified in dropping the proceedings initiated by the Show Cause Notice dated 05.02.2019? Issue (i): Eligibility of CENVAT Credit on Windmill related Services 8.1 The Department contended that the windmills are geographically located far away from the factory premises and hence the services used for their maintenance cannot be considered as having nexus with the manufacture of cement. 8.2 It was argued that electricity generated at the windmills is first fed into the Tamil Nadu Electricity Board grid ....
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....e integrally connected with the manufacturing activity. 8.9 The Larger Bench of the Tribunal in Parry Engineering & Electronics Pvt. Ltd. (supra) examined the very issue of admissibility of credit on services used for windmills located outside the factory and held unequivocally that such services qualify as input services. 8.10 The Hon'ble Bombay High Court in Endurance Technology Pvt. Ltd. (supra) and the Hon'ble Madras High Court in Ashok Leyland Ltd. (supra) have affirmed the Larger Bench view, holding that denial of credit merely on the ground of geographical distance would defeat the objective of the CENVAT scheme and renewable energy policy. 8.11 The Department's argument that electricity is routed through the grid does not d....
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.... of departmental appeal does not obliterate the binding nature of the Tribunal's order, particularly when no stay was granted. We further find that the Appeal was Allowed in favour of the Assessee in Nov 2025 . The Gujarat High Court reversed the CESTAT order which had denied credit on the ground of remoteness of the wind farm and lack of nexus. The Substantial questions of law were answered in favour of the taxpayer affirming that maintenance services for windmills are eligible as input services. 9.6 We therefore hold that on merits, the suo motu re-credit taken by the respondent in January 2017 is lawful and sustainable. Issue (iii): Legality of Dropping SCN Proceedings 10.1 The Department argued that the adjudicating authorit....
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....we hold that the CENVAT credit availed by the respondent on services used for maintenance of windmills is legally admissible. The contrary view canvassed by the Department is therefore rejected." 10.5 We find that the factual and legal matrix in Ajanta Transistors Clock Mfg. Co. is applicable on all fours to the present case of M/s. The Ramco Cements Limited. Therefore, the ratio laid down by the Hon'ble Gujarat High Court squarely applies to the case of Ramco Cements, leaving no scope for a contrary interpretation. 10.6 The Hon'ble Supreme Court in Union of India v. Kamlakshi Finance Corporation Ltd. - 1991 (55) ELT 433 (SC) has categorically held that quasi-judicial authorities are bound by appellate decisions and cannot disregar....