2017 (8) TMI 1096 - AT - Central Excise

CENVAT credit - input services - erection and installation, repair and maintenance and also other similar services utilized/used in its Wind Mill site at Jaisalmir - denial on the ground that the wind mill is a distinct unit and situated at a place away from the factory of manufacture of final product and thus, should not be considered as the factory of the manufacture of the appellant for the purpose of availment of cenvat credit - Held that - Since there is no stipulation contained in either Rule 2 or Rule 3 ibid providing for use of the services exclusively within the factory, the disputed services used in the wind mill for generation of electricity, which in turn, were used for manufacture of the final product in the factory of the appellant, should be considered as input service for the purpose of availment of cenvat credit of service tax paid thereon - similar issue decided in the case of Bajaj Auto ltd. Vs. CCE 2016 (1) TMI 593 - CESTAT MUMBAI , where the cenvat credit of services tax paid on various services used in the wind mill for generation of electricity was allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of cenvat credit on service tax paid for input services used in a wind mill located away from the factory premises.

Analysis:
The case involved an appeal against an order passed by the Commissioner, Central Excise and Customs, Jaipur, regarding the denial of cenvat credit on service tax paid for input services used in a wind mill at a different location from the manufacturing factory. The appellant, engaged in the manufacture of cement and clinker, claimed the credit based on the argument that the services were received and used indirectly in the manufacturing process. The appellant's advocate cited various judgments to support the broad interpretation of input services and compliance with Rule 3 of the Cenvat Credit Rules, 2004. On the other hand, the respondent relied on the location of the wind mill outside the factory premises to deny the credit, referencing the Supreme Court's decision in Maruti Suzuki case and a Tribunal decision. The Tribunal noted that the electricity generated by the wind mill was indeed used in the factory for manufacturing excisable goods, which were subject to central excise duty. The Tribunal emphasized that Rule 2(l) and Rule 3 do not specify exclusive use within the factory for services to qualify as input services. Citing precedents where similar credits were allowed, the Tribunal distinguished the Maruti Suzuki case, which dealt with inputs, from the present case involving input services received by the manufacturer of the final product. Consequently, the Tribunal found no merit in the impugned order and allowed the appeals in favor of the appellant.

This detailed analysis clarifies the interpretation of input services, the relevance of Rule 3 of the Cenvat Credit Rules, 2004, the significance of service usage in manufacturing processes, and the distinction between input and input services in the context of cenvat credit availment.