2017 (8) TMI 1502 - AT - Central Excise

CENVAT Credit - input services - services pertained to development work of underground mines and fan installation in the mines for the purpose of ventilation - Held that - It appears that the services were carried out to obtain sufficient quantity of raw material, of course outside the factory premises but within the mining area. So, these services are connected with the manufacture of the final product and prima facie eligible for cenvat credit - case remanded back to adjudicating authority for fresh decision after examining the nexus between the services and the final product of the appellant - appeal allowed by way of remand.

Summary

Issues involved: Applicability of cenvat credit on services availed outside the factory premises but within the mining area for the purpose of manufacturing zinc and lead concentrates falling under Chapter 76 of the Central Excise Tariff Act, 1985.

Analysis:

1. Issue of Availing Cenvat Credit on Services Outside Factory Premises:
During the period under consideration, the appellant was involved in the manufacture of zinc and lead concentrates and availed cenvat credit on various inputs, capital goods, and input services. The dispute arose when the authorities disallowed the cenvat credit claimed on services availed outside the factory premises but within the mining area. The appellate tribunal observed that the services were related to development work of underground mines, ventilation, weighment of ore, construction of sub-station for electricity supply, and provision of mobile phones due to the unavailability of fixed phone lines in the mining area. The tribunal noted that these services were essential for obtaining raw materials, even though they were conducted outside the factory premises. The tribunal found a nexus between the services and the final product, indicating eligibility for cenvat credit.

2. Decision and Remand for Fresh Examination:
After hearing both parties and examining the material on record, the tribunal concluded that the services in question were directly connected with the manufacturing process, despite being carried out outside the factory premises. Therefore, the tribunal set aside the impugned order and remanded the case back to the adjudicating authority for a fresh decision. The adjudicating authority was directed to reexamine the nexus between the services and the final product, providing a reasonable opportunity to the appellant. The tribunal allowed the filing of fresh evidence as per the law. Ultimately, the appeal filed by the appellant was allowed by way of remand, ensuring a thorough review of the issue.

3. Final Verdict and Directions:
In the final pronouncement, the appellate tribunal emphasized the importance of the services provided within the mining area for the manufacturing process. By highlighting the necessity of these services for obtaining raw materials, the tribunal justified the eligibility of cenvat credit on such services. The decision to remand the case back to the adjudicating authority was made to ensure a detailed examination of the nexus between the services and the final product, with the provision for admitting fresh evidence. The tribunal's ruling aimed at facilitating a fair and comprehensive assessment of the issue, ultimately allowing the appellant the opportunity to claim the cenvat credit rightfully associated with the services availed within the mining area.