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TMI Blog2019 (3) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... , Standing Counsel For the Respondent : Mr.T.Ravikumar, Senior Standing Counsel COMMON JUDGMENT T.S.SIVAGNANAM, J. These appeals by the appellant/Revenue have been filed challenging the common order of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Chennai, dated 05.06.2012, in Final Order Nos.601 and 602 of 2012. 2.The above appeals have been admitted, on 09.04.2014, on the following substantial questions of law:- (i) Whether the CESTAT was correct in holding that there had been no contravention of the 2nd proviso to Rule 3(5) of CCR as it existed at the material time; (ii) Whether the CESTAT was correct in setting aside the order of the adjudicating authority holding that there was no requirement for any demand of duty or reversal of credit; and (iii) Whether the CESTAT was correct in applying the amended provision under Rule 3(5) of CCR which came into effect from 01.04.2008 for the period prior to that date? 3.Heard Mr.V.Sundareswaran, learned Standing Counsel for the appellant; and Mr.T.Ravikumar, learned Senior Standing Counsel for the respondent. 4.The learned counsel on either side submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty or interest could be levied, as there is no intention to evade payment of duty. 9.The adjudicating authority pointed out that the services involved in the assessee's case are operations and maintenance of windmills, the windmills are located far away from the factory in a wind-potential area and the power generated is transmitted to the TNEB grid. Further, it was held that generation, sale and consumption are not possible immediately, unless the power plant is located near the factory and directly connected to the factory. Thus, the authority concluded there is no direct nexus between the electricity generated by the windmill and that was consumed in the factory and the transaction, can at the, most be treated as a book adjustment. Accordingly, the proposal in the show cause notice was confirmed. Aggrieved by the same, the assessee preferred appeal before the Tribunal. Before the Tribunal, all the cases were heard together and the Tribunal placed reliance on the decision of the High Court of Bombay in the case of C.C.E. Cus., Aurangabad vs. Endurance Technology Pvt. Ltd., 2017 (52) S.T.R. 361 (Bom.) and held that credit is admissible in the nature of transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this is to be borne in mind to consider as to whether the input services on which credit has been availed could at all be availed especially when there is no direct nexus between the electricity generated and the manufacturing activity. 14.The learned counsels appearing for the assessees on the other hand submitted that much of the arguments of the learned counsel for the Revenue is beyond the allegations made in the show cause notice, which they are not entitled to do especially in an appeal filed under Section 35G of the CEA, 1944. It is their submission that the allegation in the show cause notice is that the windmill is situated far away from the factory and therefore, there is no nexus. Further, it is submitted that the decision in the case of Endurance Technology Pvt. Ltd. (supra) having attained finality, the same would bind the Revenue. 15.In terms of Section 35G of the CEA, 1944, the High Court can entertain an appeal against the order of Tribunal, if it is satisfied that the case involves a substantial question of law. Sub-Section 3 empowers the High Court to formulate a substantial questions of law, if the same is involved and the appeal shall be heard only o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestions of law framed in these appeals. The first question framed for consideration was whether the assessee is entitled to avail Cenvat credit on management, maintenance or repair services provided on services to windmills installed and situated away from the factory premises. The second question was whether electricity generated on two different places far away could be said to have been used for manufacture of the final product of the assessee in its factory at Aurangabad. 18.So far as the second substantial question of law is concerned, it was answered in the affirmative in the light of the stand taken that admittedly, such electricity generated at those two different locations was adjusted to the electricity used in the factory at Aurangabad and this adjustment was admitted by the Revenue and accordingly, the second question was answered in favour of the assessee. In the case on hand also, in the show cause notice, the adjudicating authority does not dispute the fact that equivalent quantity, that is, the quantity generated is the same as the quantity drawn by the assessees from the TNEB grid. On the first question of law, with regard to the availment of cenvat credit on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Deepak Fertilizers Petrochemicals Corporation Ltd. v. C.C.Ex. Belapur. The question between the parties is whether the respondent was entitled to credit on management, maintenance or repair services provided on windmills installed by the respondents. The answer lies in interpretation of Rule 2(B)(k), (l) (m), 3 and 4 of Cenvat Credit Rules, 2004. .............. 5.On perusal of these Rules, it becomes clear that the management, maintenance and repair of windmills installed by the respondents is input service as defined by clause I 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 judgments referred to above, also interpret the word input service in similar fashion. In the case of Commissioner of Central Excise, Nagpur v. Ultratech Cement Ltd. [cited supra], the Division Bench of this Court held that the definition of input service is very wide and covers not only services which are directly or indirectly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credit of excise duty and Service Tax among others paid on any input or capital goods received in the factory of manufacturer of the final product, insofar as any input service in concerned, the only stipulation is that it should be received by the manufacturer of final product. This must be read with the broad and comprehensive meaning of the expression 'input service' in Rule 2(l). The input services in the present case were used by the appellant whether directly or indirectly, in or in relation to the manufacture of final products. The appellant, it is undisputed, manufactures dutiable final products and the storage and use of ammonia is an intrinsic part of that process. 6.In view of this discussion, we have no hesitation to hold that the answer to question No.(I) is in affirmative. Despite this settled position, learned counsel for the appellant tried to submit that the judgment cited at Sr. No. (2) is being challenged before Supreme Court. This submission does not really help us in deciding the appeals. Both appeals are dismissed. 21.In Deepak Fertilizers Petrochemicals Corporation Ltd. (supra), which has been quoted in Endurance Technology Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in Rule 2(l), which defines input service and it would mean any service used by a provider of taxable service for providing an output service or used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal. Though the definition of input service has to be widely construed, and in terms of Rule 3, which allows the manufacturer of final products to take the credit of service tax inputs or capital goods received in the factory of manufacture of final products, insofar as any input service is concerned, the only stipulation is that it should be received by the manufacturer of final products. Therefore, this would be the correct manner of interpreting Rule 2(l) of the Rules. 26.In the light of the above, we are of the considered view that the decision in the case of Ellora Times Ltd. (supra) does not lay down the correct legal position and we agree with the decision of the High Court of Bombay in Endurance Technology Pvt. Ltd. (supra), which has been followed by the Larger Bench of the Tribunal in Parry Engg. Electronics P. Ltd. 27.Mr.A.P.Srinivas, placed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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