2014 (8) TMI 87 - AT - Central Excise

Cenvat Credit on the pipes which were used for transportation of water as input and the service tax paid on the services rendered for laying of such pipeline and maintenance of such pipelines - appellant is a manufacturer of pharmaceutical goods and needs to draw water for manufacturing purposes - Held that - where a service is of the description which is specified in Rule 6(5), the manufacturer is entitled to credit of the whole of the service tax unless the service is used exclusively, that is to say solely in or in relation to the manufacture of exempted goods or any provision of exempted services. - Decided in favor of assessee. Regards the Cenvat Credit of the central excise duty paid on pipes - Held that - The earlier appeal involving identical issue was not pressed and was therefore, dismissed. The respondent having taken a conscious decision to accept the principles laid down in Pepsico India Holdings Ltd. (2000 (10) TMI 122 - CEGAT, CHENNAI) cannot be permitted to take the opposite stand in this case. - Decided against the assessee.

Summary

Issues involved:
Eligibility to avail Cenvat Credit on pipes used for water transportation as input and service tax paid on services for laying and maintaining pipelines from 2009 to 2012.

Detailed Analysis:

1. Issue of Cenvat Credit on Pipes and Input Services:
The appellant, a pharmaceutical goods manufacturer, sought Cenvat Credit for central excise duty on pipes used to draw water from Narmada canal and services for laying and maintaining the pipeline. Lower authorities denied the credit as pipelines were not within the factory premises. The appellant's counsel cited relevant judgments like ONGC and Birla Corporation to support eligibility for credit. The Tribunal noted undisputed facts of water transportation from Narmada canal to the factory using the pipes and deemed services eligible for Cenvat Credit.

2. Cenvat Credit on Service Tax Paid:
Regarding service tax paid on input services for the pipelines, the Tribunal referred to the Bombay High Court judgment in ONGC case. The judgment emphasized the broad definition of "input service" under Rule 2(l) of Cenvat Credit Rules, allowing credit for services used directly or indirectly in relation to manufacturing final products. The Tribunal highlighted the importance of maintaining separate accounts for dutiable and exempted goods under Rule 6(2) and 6(5) to determine credit eligibility.

3. Precedents and Legal Interpretation:
The Tribunal relied on the decision in CCE, Belgaum Vs. Bellary Steel and Alloys Ltd., supported by Commissioner Vs. Pepsico India Holdings Ltd., which was upheld by the Supreme Court in Birla Corporation case. The legal interpretation emphasized the comprehensive scope of "input service" and the entitlement to credit unless services were exclusively used for exempted goods. The Tribunal concluded that the Cenvat Credit availed by the appellant aligned with the legal norms established by the High Court and the Apex Court, leading to the setting aside of the impugned orders and allowing the appeals.

In summary, the judgment resolved the issues of Cenvat Credit eligibility on pipes and input services for water transportation, emphasizing legal interpretations, precedents, and the broad scope of "input service" under the Cenvat Credit Rules. The decision was based on aligning the appellant's actions with established legal norms and precedents, ultimately allowing the appeals and setting aside the lower authorities' orders.