2008 (11) TMI 591 - AT - Central Excise

Summary

Issues involved: Admissibility of Cenvat credit for service tax paid on maintenance of Windmill located away from the factory.

Summary:
The case involved M/s. Rangammal Steels & Malleables seeking waiver of pre-deposit and stay of recovery of inadmissible Cenvat credit demanded from them for service tax paid on a Windmill generating electricity away from the factory. The lower authorities contended that credit for maintaining a Windmill generating non-excisable electricity is not admissible to the assessee engaged in manufacturing Brake drums. The appellants argued that the electricity generated by the Windmill is used in the manufacture of excisable goods, akin to capital goods credit for using a generating set within the factory.

In the stay application, the counsel for the appellants cited a judgment where credit for duty paid on explosives used in a captive mine was allowed as Cenvat credit, supporting the legitimacy of the impugned credit. On the other hand, the JDR referred to a Tribunal decision where similar credit for a Windmill located away from the factory was denied as Cenvat credit.

Upon considering the submissions, the Tribunal found that the power generated by the Windmill and used in the factory of the assessee made the impugned credit prima facie admissible. The maintenance of the Windmill indirectly supported the manufacturing operations of the assessee. Consequently, the Tribunal granted waiver of pre-deposit and stay of recovery for the demand and penalty until the final disposal of the appeal.