2010 (9) TMI 468 - AT - Service Tax

Credit of the service tax - Maintenance service are input services - The appellant has installed wind mills for generation of electricity - M/s. N.E.G. Micon supplied erection and commissioning service to the appellant in installing the above said wind mills and the appellant had received maintenance service towards the maintenance of the wind mills - The appellant contended that the electricity generated through the wind mill is indirectly used in manufacture of excisable goods in his factory and therefore the service provided by M/s. N.E.G. Micon and the maintenance service are input services and he was entitled to avail the credit of the service tax paid by the service providers. The appellants had filed monthly returns showing availment of credit no suppression or mis-statement with an intent to evade duty, can be attributed to them - Thus, the Commissioner (Appeals) has set aside the penalty imposed upon the appellants by following the Tribunal s decision in the case of M/s. Rajhans Metals Pvt. Ltd - Held that the demand of credit having been raised after the normal period of limitation is hit by limitation and is time barred - Hence, the appeals are disposed off accordingly.

Summary

Issues:
- Credit of service tax on wind mill services for manufacturing excisable goods
- Denial of credit on wind mill services due to limitation period

Analysis:

Issue 1: Credit of service tax on wind mill services for manufacturing excisable goods
The case involved the appellant installing wind mills for electricity generation, which was then used in manufacturing excisable goods. The appellant claimed that services provided for installing and maintaining the wind mills were input services, allowing them to avail credit for the service tax paid. However, the Central Excise officers disputed this claim during an audit, leading to show cause notices for recovery of availed credits. The Commissioner (Appeals) confirmed the demand of duty but set aside the penalties, citing the issue as a bona fide interpretation matter. The appellant's appeal against this decision was dismissed by the Tribunal, which had previously ruled against such credit claims in cases like M/s. Rajhans Metals Pvt. Ltd. and M/s. Ellora Times Ltd. The Tribunal upheld the lower authority's decision, denying the credit for service tax on wind mill services situated away from the factory, based on established precedents.

Issue 2: Denial of credit on wind mill services due to limitation period
Regarding the denial of credit amounting to Rs. 2,04,000 availed on 1-6-06, the show cause notice was issued on 11-9-07, exceeding the normal limitation period of one year. The Commissioner (Appeals) rejected the appellant's plea of the demand being time-barred, citing lack of clear disclosure in monthly returns. However, the Tribunal disagreed with this assessment, noting that the appellant had regularly submitted returns showing the credit availed. As there was no evidence of suppression or misstatement to evade duty, the demand beyond the limitation period was deemed time-barred. The Tribunal set aside the penalty imposed by the Commissioner (Appeals) based on the interpretation issue and lack of mala fide intent on the appellant's part. Consequently, the demand of duty amounting to Rs. 2,04,000 was set aside, while the demand of Rs. 59,328 was upheld. The Tribunal disposed of both appeals accordingly, emphasizing the importance of adherence to limitation periods in tax matters.

This comprehensive analysis of the judgment highlights the key issues, arguments, and decisions made by the Tribunal in the case, providing a detailed overview of the legal intricacies involved.