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2025 (1) TMI 137 - AT - Central ExciseCENVAT Credit - input service credit of the service tax paid on lease rentals and operation and maintenance charges of windmills - extended period of limitation - HELD THAT - A perusal of the impugned order reveals that the Commissioner had observed from the above Agreement between the Appellant and M/s.ALWEL, the inputs which were used for operation and maintenance of windmills was used by M/s.ALWEL which is evident from the fact that the contract specified that the cost of operation and maintenance was to be borne by M/s.ALWEL. M/s.ALWEL was also responsible for the generation of electricity and they were in fact getting the windmills maintained and hence the appellant was in no way responsible for maintenance of windmills nor had they given any contract for doing so to M/s.ALWEL for operation and maintenance of windmills in question. A perusal of the above Agreement between the parties clearly indicates that the understanding was for supply of electricity and nowhere in the contract is it mentioned that M/s.ALWEL would be operating and maintaining the windmills on behalf of the Appellant. The fact however remains that the doubt in the minds of the Adjudicating Authority remains unanswered, which, goes into the root of the issue, that is to say, there is no mention about the lease of the windmills in the Agreement between the parties, the agreement is only for supply of electricity and M/s.ALWEL was not at all operating and maintaining the windmills for the Appellant. The Commissioner is justified in invoking the extended period of limitation. Conclusion - The appellant was not entitled to input service credit and the extended period of limitation was justifiably invoked by the Revenue. Appeal dismissed. 1. ISSUES PRESENTED and CONSIDERED The core legal question in this judgment is whether the appellant was justified in availing input service credit of the service tax paid on lease rentals and operation and maintenance charges of windmills. The tribunal also considered whether the extended period of limitation could be invoked by the Revenue due to alleged suppression of facts by the appellant. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Justification for Availing Input Service Credit Relevant Legal Framework and Precedents: The appellant relied on various judicial pronouncements to justify their claim for input service credit, including precedents from the High Court and the Supreme Court that addressed similar issues of input service credit and revenue neutrality. Court's Interpretation and Reasoning: The tribunal examined the agreement between the appellant and M/s. ALWEL and found that the agreement was solely for the supply of electricity, with no mention of leasing windmills. The tribunal noted that the operation and maintenance of the windmills were the responsibility of M/s. ALWEL, not the appellant. Key Evidence and Findings: The tribunal focused on the agreement's clauses, which clearly indicated that M/s. ALWEL was responsible for the operation and maintenance of the windmills, and that they bore the costs associated with these activities. The agreement also stated that M/s. ALWEL was the owner of the equipment and entitled to claim depreciation and other benefits. Application of Law to Facts: The tribunal applied the legal principles from the cited precedents but found that the facts of the case did not support the appellant's claim for input service credit. The absence of a leasing arrangement in the agreement was pivotal in the tribunal's decision. Treatment of Competing Arguments: The appellant argued that the electricity generated was used in manufacturing their final products, thus justifying the credit. However, the tribunal found this argument insufficient, as the agreement did not support the claim of leasing windmills. Conclusions: The tribunal concluded that the appellant was not justified in availing input service credit, as the agreement did not include a lease of the windmills, and the services were not received within the factory premises. Issue 2: Invocation of Extended Period of Limitation Relevant Legal Framework and Precedents: The appellant cited Supreme Court decisions that limited the Revenue's ability to invoke the extended period of limitation in cases of revenue neutrality and lack of suppression. Court's Interpretation and Reasoning: The tribunal found that the appellant had not adequately addressed the concerns raised by the Original Authority regarding the absence of a leasing arrangement, which was central to the issue of suppression. Key Evidence and Findings: The tribunal noted that the appellant's arguments did not directly address the findings of the Original Authority, particularly the lack of evidence for a leasing arrangement in the agreement. Application of Law to Facts: The tribunal determined that the appellant's failure to provide clear evidence of a leasing arrangement justified the invocation of the extended period of limitation. Treatment of Competing Arguments: The appellant's reliance on case law regarding revenue neutrality was dismissed, as the tribunal found that the facts did not support the appellant's claims. Conclusions: The tribunal upheld the Revenue's invocation of the extended period of limitation, finding no merit in the appellant's arguments against it. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: "The finding of the Original Authority however, has not at all been answered by the Appellant but their contentions are only tangential; the Appellant restricts its argument on the observation as to the allegation of windmills being outside the factory and the reliance of various case law is also on the same lines." Core Principles Established: The tribunal emphasized the importance of explicit contractual terms in determining eligibility for input service credit and the necessity of addressing all findings of the adjudicating authority. Final Determinations on Each Issue: The tribunal dismissed the appeals, concluding that the appellant was not entitled to input service credit and that the extended period of limitation was justifiably invoked by the Revenue.
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