2017 (7) TMI 386 - AT - Central Excise

CENVAT credit - services of maintenance of tyres used in various HEMM - denial on account of nexus - Held that - It is an admitted fact that such heavy earth moving machineries were used for mining and procurement of ore which was further used/ subjected to process of beneficiation for obtaining the dutiable metal being zinc etc. Accordingly the said input service qualifies for credit under Rule 2(l) of the CCR 2004 - the issue is squarely covered vide final order of this Tribunal in the appellant s own case Hindustan Zinc Ltd. Versus CCE Jaipur-II 2013 (11) TMI 944 - CESTAT NEW DELHI - appeal allowed - decided in favor of appellant.

Summary

Issues:
Cenvat credit eligibility for maintenance services of Heavy Earth Moving Machineries (HEMM) used in captive mines.

Analysis:
The appellant, engaged in lead and zinc manufacturing, utilized Heavy Earth Moving Machineries (HEMM) in captive mines for mining and procurement of ore, which was further processed as raw material. They availed cenvat credit for maintenance services of HEMM during 2007-08 to 2011-12. However, a show cause notice alleged ineligibility of cenvat credit for these services. The department contended that these services were not utilized in or in relation to the manufacture of final products, disallowing the credit of approximately ?57,47,466 along with a penalty under Cenvat Credit Rules, 2004.

The appellant argued that the maintenance services of HEMM, including tyres, were integral to the manufacturing process, making them eligible for cenvat credit. They cited judicial precedents to support their claim, emphasizing that services related to tyres used in the manufacturing process should qualify for credit. The appellant also contended that the services fell under the inclusive portion of the definition of input services, as they were used in relation to procurement of ore, an input for manufacturing. Additionally, they argued that the phrase "activities related to business" encompassed a wide range of services, even if not explicitly mentioned in the definition of input service.

After hearing both parties, the Tribunal found in favor of the appellant, acknowledging that the maintenance services for HEMM used in captive mines were essential for mining and procurement of ore, which contributed to the manufacturing process. The Tribunal referred to its final orders in the appellant's previous cases to support the eligibility of cenvat credit for such services. Consequently, the impugned order disallowing the credit was set aside, and the appellant was granted consequential relief.

In conclusion, the Tribunal ruled that the maintenance services of HEMM used in captive mines for mining and procurement of ore were integral to the manufacturing process, making them eligible for cenvat credit under the Cenvat Credit Rules, 2004. The decision was based on the understanding that these services directly contributed to the production of dutiable metals like zinc, aligning with the definition of input services.