2017 (9) TMI 271 - AT - Central Excise

CENVAT credit - consultancy service with reference to laying of pipelines for water supply to the mines - denial on the ground of nexus - Held that - the issue has been settled in favour of the appellant in several decisions in the appellant s own case 2017 (5) TMI 1184 - CESTAT NEW DELHI , where it was held that subject input service is having sufficient nexus with the manufacturing process of the appellant and is covered by the definition of input service under Rule 2(l) of CCR, 2004 - credit allowed. CENVAT credit - consultancy service in connection with raising the embankment/ dam - Held that - There is no dispute that water is an essential input which is used in the mines attached to the factory. The service tax credit availed under dispute, is towards consultancy service in connection with raising the embankment/ dam which is in connection with the procurement of the input, water - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the service tax credit availed on consultancy services for laying pipelines for water supply to the mines is eligible under the Cenvat Credit Rules, 2004.
2. Whether the service tax credit availed on consultancy services for raising the embankment of the dam is integrally connected with the manufacturer of concentrated ore as per the Cenvat Credit Rules, 2004.

Issue 1:
In Appeal No.E/50887/2014-Ex [DB], the Tribunal considered the eligibility of service tax credit on consultancy services for laying pipelines for water supply to the mines. The appellant argued that previous decisions favored them, citing specific cases. The Tribunal agreed, stating that the issue had been settled in favor of the appellant in their own case. The impugned order disallowing the credit was set aside, and the appeal was allowed with consequential benefits.

Issue 2:
In Appeal No.E/50888/2014 Ex-[DB], the focus was on the service tax credit availed on consultancy services for raising the embankment of the dam. The Department contended that these services were not integrally connected with the manufacture of concentrated ore. However, the Tribunal interpreted the definition of input service broadly, encompassing services used in relation to the business of manufacturing final products. It was established that the embankment work was crucial for water supply to the mines, an essential input for the manufacturing process. Therefore, the service tax credit on such services was deemed eligible under the Cenvat Credit Rules, 2004. Consequently, the appeals were allowed, and the impugned orders were set aside.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, allowing the service tax credit on consultancy services for laying pipelines and raising the embankment, highlighting the broad interpretation of input services under the Cenvat Credit Rules, 2004.