2018 (5) TMI 186 - AT - Central Excise

CENVAT credit - services used for manufacturing activities at their factory/plant as well as for generation of electricity - Alleging that appellant has sold electricity to Gujarat Energy Transmission Company Ltd (GETCO), hence, 6% of the value of the electricity energy sold was demanded u/r 6(3) of CCR 2004 - Held that - the Ld Advocate has placed the relevant electricity bills paid by the Appellant after adjustments allowed for wheeling out of electricity to the grid of GETCO, generated at their wind mill. These evidences have not been examined. Therefore, only for the limited purpose of verification whether electricity energy generated at the Wind Mill was sold or otherwise, the matter is remanded to the Adjudicating Authority. CENVAT credit - Repair and Maintenance Services used at the Wind Mill situated away form the factory premises - Held that - Cenvat Credit of Service Tax paid on input services viz., Repair and Maintenance Service and Works Contract Services in relation to Repair and Maintenance service used for generation of electricity in Wind Mill situated away from the factory following the Larger Bench judgment in the case of Parry Engg & Electronics (P) Ltd vs CCE & ST Ahmedabad 1 2016 (1) TMI 546 - CESTAT AHMEDABAD - there is no merit in denying credit on other input services common for manufacturing activity and running of the wind Mill, when credit of service tax paid on repair & maintenance service is allowed - credit allowed. Appeal allowed in part and part matter on remand.

Summary

Issues:
- Appeal against OIA passed by Commissioner of Central Excise, Customs and Service Tax (Appeals) - AHMEDABAD regarding availing cenvat credit on various services for manufacturing activities and electricity generation.
- Dispute over the demand of Cenvat Credit on electricity sold and repair services for Wind Mill.
- Argument regarding denial of credit on common input services used for maintenance of Wind Mill and manufacturing activity.
- Allegation of selling electricity generated in Wind Mill.
- Appeal challenging the rejection of appeal by Ld Commissioner (Appeals) and seeking justification for denying credit on common input services.

Analysis:
The appellant filed an appeal against the OIA passed by the Commissioner of Central Excise, Customs and Service Tax (Appeals) - AHMEDABAD, challenging the demand of Cenvat Credit on Service Tax paid on various services used for manufacturing activities and electricity generation. The appellant availed cenvat credit on services like 'Banking and Financial Services', 'Business Support Services', and 'Chartered Accountant Service'. The dispute arose when a demand was made under Rule 6(3) of Cenvat Credit Rules, 2004, for selling electricity to Gujarat Energy Transmission Company Ltd (GETCO) and for availing Cenvat Credit on 'Repair and maintenance Services' for their Wind Mill situated away from the factory. The Ld Commissioner (Appeals) partially allowed the appeal related to the admissibility of credit on 'Repair and Maintenance Services' for the Wind Mill but confirmed the demand for common input services. The appellant argued that if credit on repair services is allowed, there is no justification for denying credit on other common input services used for manufacturing and Wind Mill maintenance.

The Ld Advocate for the appellant contended that the electricity generated in the Wind Mill was not sold but used entirely in the factory premises. The Ld AR for the Revenue supported the findings of the Ld Commissioner (Appeals). Upon examination, the Hon'ble Member (Judicial) found merit in the appellant's argument and remanded the matter to the Adjudicating Authority for verification. The judgment highlighted that if credit on repair and maintenance services is allowed, denying credit on other common input services without proper examination is unjustified. The appellant's evidence, including electricity bills, supporting the non-sale of electricity generated in the Wind Mill, was not adequately considered. Therefore, the appeal was allowed by way of remand for further verification on whether the electricity generated at the Wind Mill was sold or not.

In conclusion, the judgment emphasized the need for a thorough examination of evidence before denying credit on common input services and highlighted the importance of verifying factual aspects like the sale of electricity to make informed decisions. The remand to the Adjudicating Authority aimed to address these issues and ensure a fair assessment based on the presented evidence.