2015 (1) TMI 498 - AT - Central Excise

CENVAT Credit - - whether the appellant is entitled to take CENVAT credit on Annual Maintenance of Wind Mill which has been located outside their factory and the electricity so generated by the wind mill has been transmitted through MSEB or not - Held that - As per Rule 3A of the Central Excise Rules, 1944 (sic) the assessee is entitled to take CENVAT credit on service tax paid in respect of the services availed by them in the course of manufacturing activity as a manufacturer. It is not in dispute that the wind mill has been installed by the appellant to generate electricity which in turn used by them. Further, I have gone through the case law relied on by the learned A.R. s in the cases of Ajanta Transistors Clock Mfg. (2010 (1) TMI 1149 - GUJARAT HIGH COURT), Asian Tubes Ltd. 2010 (9) TMI 468 - CESTAT, AHMEDABAD and Ellora Times Ltd. (2008 (4) TMI 279 - CESTAT AHEMDABAD) and also the stay order passed by the Tribunal in the case of Maharashtra Seamless Ltd. (2012 (11) TMI 241 - CESTAT MUMBAI). - by a majority decision, this Tribunal granted waiver of pre-deposit to the appellant. In the case of Maharashtra Seamless Ltd. (supra) and Endurance Technologies Ltd. (2011 (7) TMI 373 - CESTAT, MUMBAI) on a similar facts this Tribunal held that the appellant is entitled to take CENVAT credit. As the learned A.R. has not brought out any decision which has been not considered by this Tribunal earlier on record to deny CENVAT credit and it is also an admitted fact that the wind mill installed by the appellant to generate electricity which have been used by the appellant in the course of business of manufacturing. Therefore, relying on the judgment of the Hon ble Bombay High Court in the case of Ultra Tech Cement Ltd. reported in - 2010 (10) TMI 13 - BOMBAY HIGH COURT I hold that the appellant is entitled to take CENVAT credit on annual maintenance charges of wind mill. In these circumstances, the impugned order is set aside - Decided in favour of assesse.

Summary

Issues:
- Denial of input service credit for Annual Maintenance Repair on wind mill located away from the factory.

Analysis:
The appellant appealed against the denial of input service credit for the maintenance of a wind mill situated away from the factory. The appellant, a manufacturer of motor vehicle parts, used electricity generated by windmills transmitted through the Maharashtra State Electricity Board (MSEB). The revenue contended that since the electricity from the windmill was not directly used for manufacturing the final product, the input service credit was not admissible. Both lower authorities upheld the denial. The appellant argued citing precedents like Maharashtra Seamless Ltd. and Endurance Technologies Ltd., where CENVAT credit was allowed in similar circumstances. The revenue, however, relied on cases like Maharashtra Seamless Ltd. vs. CCE and others to oppose the credit claim.

Upon hearing both sides, the main issue was whether the appellant could avail CENVAT credit for the annual maintenance of a wind mill located outside the factory, with electricity generated and used indirectly in manufacturing. Rule 3A of the Central Excise Rules was referred to, stating that the assessee could claim credit for services used in manufacturing. The Tribunal noted precedents like Maharashtra Seamless Ltd. and Endurance Technologies Ltd., where similar credit claims were allowed. The Tribunal found no new evidence presented by the revenue to deny the credit claim and acknowledged that the windmill was installed by the appellant for electricity generation used in manufacturing operations. Relying on the judgment of the Hon'ble Bombay High Court in the case of Ultra Tech Cement Ltd., the Tribunal ruled in favor of the appellant, allowing the CENVAT credit on the annual maintenance charges for the wind mill. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary consequential relief.

This judgment highlights the importance of direct usage of services in manufacturing activities for claiming input service credit and emphasizes the relevance of precedents in similar cases to support credit claims. The decision provides clarity on the eligibility criteria for CENVAT credit in situations where services are indirectly utilized in manufacturing processes.