2017 (11) TMI 153 - AT - Central Excise

CENVAT credit - windmill maintenance charges - denial on the ground that the windmills are situated outside the factory - Held that - The Hon ble High Court of Bombay in the case of Endurance Technology Pvt. Ltd. 2015 (6) TMI 82 - BOMBAY HIGH COURT has held that management, maintenance and repair of windmills installed by the respondents is input service as defined by clause l of Rule 2. Rule 3 and 4 provide that any input or capital goods received in the factory or any input service received by manufacture of final product would be susceptible to CENVAT credit. Rule does not say that input service received by a manufacturer must be received at the factory premises - the disallowance of credit is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether credit availed on service tax paid on windmill maintenance charges is eligible for CENVAT credit.

Analysis:
The case involved the appellants, manufacturers of reclaimed rubber, who availed CENVAT credit on service tax paid for windmill maintenance charges. The dispute arose as the department contended that the credit was not eligible since the windmills were located outside the factory premises. Show cause notices were issued, leading to the original authority disallowing the credit, imposing a demand, interest, and penalty. The Commissioner (Appeals) upheld this decision, prompting the appellants to appeal.

During the hearing, the appellant's counsel cited precedents, including a decision by the Larger Bench of the Tribunal and a judgment from the Hon’ble High Court of Bombay, to support their case. The respondent reiterated the findings of the impugned order. The main issue revolved around whether the credit availed on windmill maintenance charges was eligible for CENVAT credit.

The Tribunal referred to the decision of the Hon’ble High Court of Bombay in a similar case, which clarified that services like windmill maintenance qualify as input services under the relevant rules. The court emphasized that the definition of input services is broad and covers services directly or indirectly used in relation to the manufacture of final products. The Tribunal, aligning with the cited judgments, held that the credit availed on windmill maintenance charges was indeed eligible for CENVAT credit.

Based on the settled legal position and the precedents cited, the Tribunal concluded that the disallowance of credit was unjustified. Consequently, the impugned order disallowing the CENVAT credit was set aside, and the appeal was allowed with any consequential relief. The Tribunal dismissed the appeals, affirming the eligibility of the credit availed on service tax paid for windmill maintenance charges.

In summary, the judgment clarified the eligibility of CENVAT credit on service tax paid for windmill maintenance charges, emphasizing the broad definition of input services and aligning with established legal interpretations. The decision provided relief to the appellants by setting aside the disallowance of the credit and allowing the appeal based on the precedents and legal principles discussed during the proceedings.