2013 (11) TMI 987 - AT - Central Excise

Eligibility for cenvat credit of the services of erection, installation & commissioning, repair and maintenance and insurance - Fly ash extraction plant at Thermal Power Plant Held that - COMMISSIONER OF C. EX., NAGPUR Versus ULTRATECH CEMENT LTD. 2010 (7) TMI 302 - CESTAT, MUMBAI - The only basis for denial of cenvat credit is that the appellant company, who have installed fly ash extraction plant at the NTPC s Power Plant at Unachahar, have manufactured fly ash which is an exempted product - in terms of Rule 6(1), they would not be eligible for cenvat credit. The appellant loaded in the bulk trucks for transportation to the appellant s cement plant - Just extraction of the fly ash generated in the Thermal Power Plant cannot be said to be manufacture of fly ash by the appellant - Fly ash has been manufactured by the Thermal Power Plant not by the appellant - Therefore, Rule 6(1) of the Cenvat Credit Rules, 2004 is not applicable at all - the services have been availed for erection, installation & commissioning, repairing and maintenance and insurance of the fly ash extraction plant installed by the appellant at the Thermal Power Plant, these services have to be treated as the services used in or in relation to the manufacture of the cement by the appellant and would be eligible for cenvat credit Decided in faovur of assessee.

Summary

Issues:
1. Admissibility of cenvat credit on services related to fly ash extraction plant.

Analysis:
The case involved the appellant, a cement manufacturer, availing cenvat credit on services related to the extraction of fly ash used in their manufacturing process. The dispute arose when the department denied the cenvat credit, claiming that since fly ash is exempt from excise duty, the credit for services related to the fly ash extraction plant was inadmissible under Rule 6(1) of the Cenvat Credit Rules, 2004.

The Assistant Commissioner upheld the denial of cenvat credit, stating that the extraction of fly ash by the appellant constituted a manufacturing process of fly ash, making it an exempted final product. This decision was affirmed by the Commissioner (Appeals), leading to the appellant filing an appeal before the Tribunal.

During the hearing, the appellant argued that they merely extracted fly ash from a thermal power plant and did not manufacture it. They contended that the extraction and transportation of fly ash were activities related to input procurement, falling under the definition of 'input service'. The appellant cited precedent cases where similar services related to plants outside factory premises were allowed cenvat credit.

After considering the submissions, the Tribunal noted that a Coordinate Bench had previously ruled in favor of allowing cenvat credit for services related to a fly ash plant. The Tribunal rejected the department's argument that the appellant's extraction of fly ash constituted manufacturing, emphasizing that fly ash was generated by the power plant and not by the appellant. Therefore, Rule 6(1) of the Cenvat Credit Rules was deemed inapplicable. The Tribunal concluded that the services in question were essential for the appellant's cement manufacturing process and thus eligible for cenvat credit.

In light of the above analysis, the Tribunal set aside the impugned order, allowing the appeal and ruling in favor of the appellant regarding the admissibility of cenvat credit on services related to the fly ash extraction plant.