Credit eligibility on Annual Maintenance of Wind Mill located outside factory.

PJ/CASE LAW/2014-15/2487

Case:-ZF STEERING GEAR (INDIA) LTD Vs COMMISSIONER OF CENTRAL EXCISE, PUNEIII

Citation:-2014-TIOL-2598-CESTAT-MUM

Brief facts:-The appellant is in appeal against the impugned order wherein input service credit of Annual Maintenance Repair on wind mill situated away from the factory was denied to the appellant.

Brief facts of the case are that the appellant is a manufacturer of motor vehicle parts for which they need electricity. The appellants have windmills. They installed wind mill away from the factory and the electricity generated from the wind mill was transmitted through Maharashtra State Electricity Board (MSEB). As the electricity was given to MSEB and in turn equivalent electricity taken from the MSEB, Revenue was of the view that as the electricity generated by wind mill has been not used for manufacturing of the final product therefore they are not entitled to avail input service credit for the maintenance of the wind mill. Both the lower authorities confirmed the demand against the appellant. Aggrieved by the order, the appellant is before Hon’ble Tribunal.

Appellant’s contention:-The learned Counsel for the appellant submits that this Tribunal in the case of Maharashtra Seamless Ltd. – 2012 (25) STR. 167 (T) = 2011-TIOL-1059-CESTAT-MUMand Endurance Technologies Ltd. – 2012 (27) STR. 321 (T) = 2011-TIOL-1045-CESTAT-MUMon an identical fact held that the appellant is entitled to take CENVAT credit. The appellant is also relied on the decision of theHon'ble Bombay High Court in the case of Deepak Fertilisers – 2013 (32) STR. 532 (Bom.) = 2013-TIOL-212-HC-MUM-CXwherein it was held that the appellant are entitled to take CENVAT credit.

Respondent’s contention:-The learned A.R. submits that as the electricity generated by wind mill has not been used by the appellant in their factory therefore, they are not entitled to take CENVAT credit as per the decision of this Tribunal in the case of Maharashtra Seamless Ltd. vs. CCE –2012 (286) 93 (Tri.-Mumbai), Asian Tubes Ltd. –2011 (263) E.L.T. 707 (Tri. Ahmd.) = 2010-TIOL-1840-CESTAT-AHM, Ellora Times Ltd. – 2009 (235) ELT 661 (Tri. Ahmd) = 2008-TIOL-2342-CESTAT-AHM and Ajanta Transistors Clock Mfg. – 2013 (29) ST J 21 (Guj).

Reasoning of judgment:-The short issue is that whether the appellant is entitled to take CENVAT credit on Annual Maintenance of Wind Mill which has been located outside their factory and the electricity so generated by the wind mill has been transmitted through MSEB or not. As per Rule 3A of the Central Excise Rules, 1944 (sic) the assessee is entitled to take CENVAT credit on service tax paid in respect of the services availed by them in the course of manufacturing activity as a manufacturer. It is not in dispute that the wind mill has been installed by the appellant to generate electricity which in turn used by them. Further, The Hon’ble Court have gone through the case law relied on by the learned A.R.'s in the cases of Ajanta Transistors Clock Mfg. (supra), Asian Tubes Ltd. and Ellora Times Ltd. (supra) and also the stay order passed by the Tribunal in the case of Maharashtra Seamless Ltd. (supra).
They find in the case of Maharashtra Seamless Ltd. (supra), while considering the stay application filed by the applicant, this Tribunal considered all the decisions relied upon by the learned A.R. Thereafter by a majority decision, this Tribunal granted waiver of pre deposit to the appellant. In the case of Maharashtra Seamless Ltd. (supra) and Endurance Technologies Ltd. (supra) on similar facts this Tribunal held that the appellant is entitled to take CENVAT credit.

As the learned A.R. has not brought out any decision which has been not considered by this Tribunal earlier on record to deny CENVAT credit and it is also an admitted fact that the wind mill installed by the appellant to generate electricity which have been used by the appellant in the course of business of manufacturing. Therefore, relying on the judgment of the Hon'ble Bombay High Court in the case of Ultra Tech Cement Ltd. reported in 2010-TIOL-745-HC-MUM they hold that the appellant is entitled to take CENVAT credit on annual maintenance charges of wind mill. In these circumstances, the impugned order is set aside and the appeal is allowed with consequential relief, if any.

Decision:-Appeal allowed.

Comment:- The analogy of the case is that the appellant is entitled to take CENVAT credit on Annual Maintenance of Wind Mill which has been located outside their factory irrespective of the fact that the electricity so generated by the wind mill has been transmitted through MSEB or not. Relied on the decision of Ultra Tech Cement Ltd. appellant is entitled to take Cenvat credit on annual maintenance charges of wind mill. As per defination of input service, any service used by manufacturer, whether directly or indirectly, in relation to the manufacture of final products and clearance of final products is eligible for cenvat credit. Therefore, credit was allowed in the present case.

Prepared by:- Monika Tak

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PJ/CASE LAW/2014-15/2487

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