2017 (5) TMI 151 - AT - Service Tax

CENVAT credit - eligible input service - technical inspection and certification service with respect of pipe lines for supply of water from dams to the Dariba Mines - Held that - subject input service is having nexus with the manufacturing process of the appellant, and, therefore, service tax paid on such service can be claimed as Cenvat Credit by them - reliance placed in the case of M/s Hindustan Zinc Ltd. Versus CCE & ST, Udaipur 2016 (7) TMI 1064 - CESTAT NEW DELHI - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of credit of Service Tax on 'technical inspection and certification service with respect of pipe lines for supply of water from dams to the Dariba Mines'

Analysis:
The appellant, M/s. Hindustan Zinc Ltd., appealed against the denial of credit of Service Tax on technical inspection and certification services related to pipelines supplying water to Dariba Mines. Both sides were represented by counsels, and after considering the facts and submissions, the Tribunal referred to a previous decision. In the earlier case, the eligibility of the appellant for service tax credit on services for laying, inspecting, and certifying pipelines for water transportation was discussed. The Tribunal noted that the lower authorities' reasoning was not sustainable as water was essential for the manufacturing process, and the pipelines were exclusively used for water transport. The Tribunal cited the Hon'ble Bombay High Court's decision emphasizing that the definition of 'input service' under Rule 2(l) of Cenvat Credit Rules, 2004 is broad and covers any services used directly or indirectly in or in relation to the manufacture of final products. The Tribunal disagreed with the restrictive interpretation by the lower authorities and held that the appellant was entitled to claim Cenvat Credit for the service tax paid on the input service used in the manufacturing process.

The Tribunal, following the precedent set in the previous case, concluded that the input service in question had a direct nexus with the manufacturing process of the appellant. Therefore, the service tax paid on such services could be claimed as Cenvat Credit by the appellant. Consequently, the impugned order denying the credit was set aside, and the appeal was allowed with any consequential relief.