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2022 (2) TMI 542 - AT - Central ExciseCENVAT Credit - input service credit availed for the unit, for the purpose of repair and maintenance to Captive Wind Mill of the appellant located far from the appellants factory, situated at Surajpur Tehsil at Ratlam, Chittor Section - HELD THAT - The issue herein is no longer res integra and has been decided in favour of the appellant /assessee by the law laid down by the Hon ble Supreme Court in the case of VIKRAM CEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE 2006 (1) TMI 130 - SUPREME COURT , wherein the Hon ble Supreme Court has upheld the allowability of the cenvat credit on the inputs or input sevices received outside the factory at the captive mines. Admittedly, in the facts of the present case, the wind mill is a captive unit of the appellant. Admittedly, the appellant have generated power at the wind mill and transferred the power under Wheeling Dealing Agreement in the Western Grid, and thereafter, has drawn power at its factory at Rajnandgaon. Further, from the Bill raised by Western Grid, it is evident that the appellant has been given credit of the units transferred to the grid at the Wind Mill and thereafter, have drawn power at Factory, they were required to make payment and if they have drawn excess power, and if they have drawn some less power, then they were entitled to such credit as per the agreement. The agreement also provides for payment of Wheeling Dealing charges to western grid by the appellant. Thus, the order of the court below is also contrary to the facts and there is clear mis-reading of the agreement between the appellant and the Western Grid. As the appeal is allowed on merits, the issue of limitation is left open - Appeal allowed - decided in favor of appellant.
Issues:
Admissibility of input service credit for repair and maintenance to Captive Wind Mill located far from the factory. Detailed Analysis: 1. Issue of Admissibility of Input Service Credit: - The appellant availed input service credit for repair and maintenance expenses towards a Wind Power Plant located beyond their factory gate. - A show cause notice was issued for disallowance of the credit, which was initially dropped but later disallowed by the Adjudicating Authority. - The Commissioner (Appeals) upheld the disallowance, stating that the wind mill and manufacturing unit are independent entities, with electricity transfer considered as a sale and re-purchase agreement. - The appellant argued citing precedents and contended that the credit should be allowed based on agreements and previous judgments. - The Tribunal found that the issue had been decided in favor of the appellant by the Supreme Court in a similar case, allowing credit for inputs or services received outside the factory at captive mines. - It was noted that the wind mill was a captive unit, and the appellant had entered into agreements for power transfer and payment with the Western Grid. - The Tribunal referred to a previous case where credit was allowed for transport expenses of coal for a captive power plant located away from the factory. - Consequently, the Tribunal allowed the appeal, setting aside the impugned order and granting the appellant consequential benefits. 2. Limitation Issue: - The Tribunal did not address the issue of limitation as the appeal was allowed on merits, leaving the question of limitation open. - The appellant's argument regarding the extended period of limitation not being applicable due to timely communication of intention to take credit was not explicitly addressed in the judgment. 3. Judicial Precedents and Arguments: - The appellant relied on various judgments and rulings to support their case, emphasizing the applicability of previous decisions in similar contexts. - The Tribunal considered the precedents cited by the appellant and found them relevant to the case, especially in light of the Supreme Court's decision in a comparable matter. 4. Misinterpretation of Agreements: - The Tribunal noted a misinterpretation of the agreement between the appellant and the Western Grid by the lower authorities, leading to an incorrect decision regarding the admissibility of credit. - The misreading of the agreement was a crucial factor in the Tribunal's decision to set aside the impugned order and allow the appeal. This detailed analysis outlines the key issues, arguments, precedents, and the Tribunal's decision regarding the admissibility of input service credit for repair and maintenance to a Captive Wind Mill located far from the factory, as addressed in the judgment by the Appellate Tribunal CESTAT NEW DELHI.
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