2011 (8) TMI 432 - AT - Service Tax

Cenvat credit - Rule 2(1) - As is clear from the above definition, input service means any service which is used by the manufacturer of final products and clearance of final products up to the place of removal. Therefore a service can be treated as input service only when it is used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal - the wind mill is located at Kutch and therefore cannot be considered as input service as the same are not used by the manufacturer directly or indirectly. Further more the power generated is an exempted product and different activity altogether and not related to manufacture - Appeal is dismissed

Summary

Issues:
1. Interpretation of the definition of input service under Rule 2(1) of the Central Excise Tariff Act, 1985.
2. Whether the wind mill installation and civil work services can be considered as input services for availing credit.
3. Applicability of previous tribunal judgments on the case.

Analysis:

Issue 1: Interpretation of the definition of input service under Rule 2(1):
The case involves the interpretation of the definition of input service as provided under Rule 2(1) of the Central Excise Tariff Act, 1985. The definition states that an input service is one used by the manufacturer directly or indirectly in or in relation to the manufacture of final products and clearance of final products up to the place of removal. This definition is crucial in determining the eligibility of services for availing credit under the Act.

Issue 2: Wind mill installation and civil work services as input services:
The appellant, engaged in the manufacture of H.R. Coils and C.R. Coils, availed credit of service tax paid on services such as installation and civil work for a wind mill used for electricity generation. The department contended that these services did not fall under the definition of input service as the wind mill was not directly or indirectly used by the manufacturer. The Tribunal agreed with the department's view, stating that the wind mill, located at a different place, was not used in the manufacturing process and the power generated was an exempted product. Therefore, the availment of credit on these services was deemed unsustainable.

Issue 3: Applicability of previous tribunal judgments:
The Tribunal referred to its earlier decision in the case of M/s. Real Strips Ltd. Vs. CCE Ahmedabad, where service tax credit was denied in a similar scenario. Additionally, the Tribunal considered various judgments cited by the appellant's advocate, including cases like Rajhans Metals (P) Ltd. Vs. CCE Rajkot, Atul Auto Ltd. Vs. CCE Rajkot, Ellora Times Ltd. Vs. CCE Rajkot, and Lanxess ABS Ltd. Vs. CCE Vadodara. These judgments were reviewed in the context of the present case to determine the legal sustainability of the appeal.

In conclusion, the Tribunal found that the appeal was not legally sustainable based on the interpretation of the definition of input service and the precedents set by previous judgments. Therefore, the appeal was dismissed, and the order of the Commissioner (Appeals) upholding the demand and interest was upheld.