2017 (6) TMI 106 - AT - Service Tax

CENVAT credit - input services - inputs - transmission towers including spares/parts of said towers - Held that - the issue of admissibility of CENVAT credit on transmission towers and spares/ parts of said towers is covered by the Tribunal s decision in case of Prism Cement Ltd. Vs CCE 2017 (3) TMI 1283 - CESTAT NEW DELHI , where it was held that Cenvat Credit is not eligible only on the ground that these goods are immovable is against the law as settled by the Hon ble High Court of Gujarat in the case of Mundra Ports and Special Economic Zone Ltd. 2015 (5) TMI 663 - GUJARAT HIGH COURT - the appellant is entitled to the Cenvat credit for the duty/taxes paid on transmission towers and their parts/spares. Admissibility of CENVAT credit for the input service of erection/ commissioning/ installation of transmission towers/ lines - Held that - When the transmission towers/ lines have been held to be admissible input for claiming Cenvat credit input service of commissioning erection and installation of said transmission towers/lines would also be eligible to Cenvat credit - The Tribunal in the case of M/s Hindustan Zinc Ltd Vs CCE, Udaipur vide 2017 (5) TMI 233 - CESTAT NEW DELHI has held that consultancy service irrespective of laying of pipelines for supply of water from dams to the mines of the appellant is an admissible service for claiming Cenvat credit - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Rejection of Cenvat credit on transmission towers and input services for erection/commission/installation of power transmission towers/lines.

Analysis:
1. The appellant appealed against the rejection of Cenvat credit on transmission towers and input services. The Tribunal considered the issue of admissibility of Cenvat credit on items used in the transmission line dedicated for the appellant's use.

2. The adjudicating authority concluded that since the transmission line is immovable property and not directly related to the manufacturing process, Cenvat credit was denied. However, the Tribunal found the denial of credit to be incorrect as the transmission line was exclusively for the appellant's use and essential for manufacturing cement.

3. Referring to the case law of Mundra Ports and Special Economic Zone Ltd., the Tribunal emphasized that goods used for providing output services are eligible for Cenvat credit, irrespective of whether the appellant is a manufacturer or service provider.

4. Citing the case of Singhal Enterprises Pvt. Ltd., the Tribunal highlighted the user test principle, allowing Cenvat credit on structural items used in support structures for capital goods. The Tribunal rejected the argument that the transmission line was outside the factory premises, citing a similar precedent where credit was allowed for PVC pipes used away from the factory premises.

5. The Tribunal held that the appellant was entitled to Cenvat credit for duty paid on transmission towers and parts/spares, based on previous decisions. Additionally, the input service for erection/commissioning/installation of transmission towers/lines was deemed admissible for Cenvat credit, following the decision in the case of Hindustan Zinc Ltd.

6. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.