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2023 (6) TMI 1153 - AT - Central ExciseCENVAT Credit - input services received at the captive coal iron ore mines, either directly or on the strength of the ISD invoices issued by the Bokna Mines Office - alleged violation of Rule 7(b) read with Rule 15 of the Cenvat Credit Rules (CCR) - extended period of limitation - HELD THAT - Ld. Commissioner entertained a view that coal and iron ore mines situated away from the factory were separate entities having their own financial transactions engaged in the manufacture of exempted goods and consequently the services rendered at the mines could not be said to have been received by the factory. However, no material has been placed on record by the revenue to substantiate that the mines were owned by separate entities. On the contrary, it is evident from the coal and iron ore mining leases dated 15.10.2007 and 16.08.2005 that these mines were allotted to the Company, Usha Martin Limited (UML), for its captive use. The contention of the Appellant that the factory and the mines were a part of UML holding a single PAN has also not been negated/refuted by the learned Commissioner. It is not in dispute that coal and iron ore were essential raw materials for the Appellant and it is also not the case of the revenue that the Appellant had more than one factory or that the credit availed at the factory was in excess of the tax paid in respect of the services availed at the mines during the relevant period. A similar issue in the context of availment of cenvat credit of service tax in the hands of the factory in respect of input services received at the Captive Mines had fallen for consideration of the Tribunal in the case of Hindalco Industries case 2012 (10) TMI 922 - CESTAT, NEW DELHI . The period involved therein was March 2005 to October 2010 and the credit was availed by the assessee s factory therein, directly as also on the strength of ISD invoices issued by the mines. The Tribunal allowed the credit of service tax to the assessee s factory by treating the Captive Mines and the factory as one integrated unit - the ratio of the said decision is squarely applicable to the facts of the present case as well. It is also found that the statutory ER-I returns were being filed along with a statement containing invoice-wise details of the credit taken and the ISD registration was obtained after disclosing all the relevant facts vide letter dated 25 April 2008 addressed to the Superintendent, Jharkhand Commissionerate. Therefore, the charge of suppression against the factory and the Bokna Mines also fails. The appeals succeed on merits as well as limitation and the impugned orders are set aside, the penalties imposed are also set aside - Appeal allowed.
Issues Involved:
1. Denial of Cenvat credit of service tax for services at captive coal and iron ore mines. 2. Imposition of penalty on the Appellant and Bokna Mines. 3. Determination of whether the mines and factory constitute one integrated unit. 4. Applicability of judicial precedents and statutory provisions. Summary: 1. Denial of Cenvat Credit: The primary issue was whether the Appellant's factory could avail Cenvat credit of service tax for services received at its captive coal and iron ore mines. The Commissioner had denied this credit, arguing that the mines and the factory were separate entities with distinct financial transactions. However, the Tribunal found no evidence to substantiate that the mines were separate entities. The Tribunal noted that the mines were allotted to the Appellant for captive use and were part of the same company with a single PAN. The Tribunal emphasized that the definition of "input services" under Rule 2(l) of the CCR is broad and does not restrict services to those received only within the factory premises. 2. Imposition of Penalty: The Tribunal also addressed the imposition of penalties on the Appellant and Bokna Mines. The Commissioner had imposed penalties based on the premise that the Appellant had suppressed facts and misrepresented the relationship between the mines and the factory. However, the Tribunal found that the Appellant had disclosed all relevant facts to the department, including obtaining ISD registration for Bokna Mines. Consequently, the Tribunal set aside the penalties imposed. 3. Integrated Unit Determination: The Tribunal held that the Appellant's factory and its captive mines constitute one integrated unit. The activities of excavating coal and iron ore in the mines and dispatching them to the factory were directly related to the manufacture of excisable goods. The Tribunal referenced several judicial precedents, including Hindalco Industries Ltd. and Vikram Cement, to support its conclusion that the factory and mines are part of a single integrated unit. 4. Applicability of Judicial Precedents and Statutory Provisions: The Tribunal cited various judicial precedents to support the Appellant's entitlement to Cenvat credit. It referenced cases such as Hindalco Industries Ltd. vs. CCE, Allahabad, and Vikram Cement vs. CCE, Indore, to establish that services received at captive mines are eligible for Cenvat credit. The Tribunal also noted that the definition of "input service" in Rule 2(l) of the CCR includes services used directly or indirectly in relation to the manufacture of final products, without restricting the usage to within the factory premises. Conclusion: The Tribunal allowed the appeals on merits as well as on the grounds of limitation, setting aside the impugned orders and penalties. The Tribunal held that the denial of Cenvat credit was unsustainable and that the Appellant's factory and captive mines constitute one integrated unit. The appeals were allowed with consequential relief.
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