2016 (8) TMI 631 - AT - Service Tax

Cenvat credit - GTA services used for transportation of pet coke and other services received by the appellant in their power plant situated within the factory - part of the power generated is being cleared to their sister units - Held that - it is found that an identical issue has come up for decision by the Tribunal in Hindustan Zinc Limited vs. CCE & ST, Jaipur - II 2016 (6) TMI 402 - CESTAT NEW DELHI which was held after examining the decision of the Hon ble Supreme Court in Maruti Suzuki Ltd. vs. CCE, Delhi III 2009 (8) TMI 14 - SUPREME COURT and Tribunal s decision in Doshion Ltd. vs. CCE, Ahmedabad 2012 (10) TMI 952 - CESTAT AHMEDABAD as affirmed by Hon ble Gujarat High Court in CCE vs. Doshion Ltd. 2016 (2) TMI 183 - GUJARAT HIGH COURT that the appellants are eligible for input service credit in full. In such situation it was also observed that the electricity generated is being used for manufacture of excisable goods by various units of the appellant and there is no allegation regarding sale of such electricity to any outside party for other purposes. As such denial of credit to the appellants will not be justifiable. - Decided in favour of appellant

Summary

Issues:
1. Disallowance of Cenvat credit on GTA services used for transportation of pet coke and other services within the factory.
2. Eligibility of input service credit in full for electricity generated and used for manufacturing excisable goods.

Analysis:
1. The appellant contested the order-in-appeal upholding the disallowance of Cenvat credit on GTA services for transportation of pet coke and other services within the factory. The lower Authorities deemed the credit ineligible due to the part of power generated being cleared to sister units through State Electricity Grid. The appellant argued that all services were related to the power plant within the factory, with a portion of power transferred to sister units engaged in similar manufacturing. Reference was made to a Tribunal decision in a similar case, where credit was upheld, emphasizing the interconnected nature of the operations.

2. The Tribunal examined the issue of input service credit eligibility for electricity generation and usage for manufacturing excisable goods. Citing precedents like Maruti Suzuki Ltd. vs. CCE, Delhi III and Doshion Ltd. vs. CCE, Ahmedabad, affirmed by the Gujarat High Court, it was established that appellants are entitled to full input service credit. The Tribunal noted that the electricity generated was solely utilized for manufacturing excisable goods by various units of the appellant, without any external sale. Relying on past judgments and the absence of any improper use of electricity, the Tribunal found the denial of credit unjustifiable and set aside the impugned order, allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the appeal and granting full input service credit for services related to the power plant within the factory and electricity used for manufacturing excisable goods, based on established legal principles and precedents.