By TIOL News Service

MUMBAI, DEC 24, 2014: 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 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.

As to how the electricity from wind mill and that given by MSEB can be distinguished is the million dollar question but the fact of the matter is that both the lower authorities confirmed the demand against the appellant.

Before the CESTAT, the appellant submitted that the Tribunal in the case of Maharashtra Seamless Ltd. - 2011-TIOL-1059-CESTAT-MUM, 2012-TIOL-1225-CESTAT-MUM and Endurance Technologies Ltd. - 2011-TIOL-1045-CESTAT-MUM on an identical fact held that the appellant is entitled to take CENVAT credit. The Bombay High Court decision in Deepak Fertilisers – 2013-TIOL-212-HC-MUM-CX wherein CENVAT credit was allowed in respect of services utilized in relation to ammonia storage tanks situated outside the factory of production was also cited in support.

The AR submitted 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 decisions in Asian Tubes Ltd. - 2010-TIOL-1840-CESTAT-AHM, Ellora Times Ltd. – 2008-TIOL-2342-CESTAT-AHM, Ajanta Transistors Clock Mfg. – 2013 (29) ST J 21 (Guj)

The Bench after considering the submissions inter alia observed –

++ As per Rule 3 of the CCR, 2004 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.

++ I 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.

++ 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 I hold that the appellant is entitled to take CENVAT credit on annual maintenance charges of wind mill.

The order-in-appeal was set aside and the appeal was allowed with consequential relief.

(See 2014-TIOL-2598-CESTAT-MUM)