By TIOL News Service

MUMBAI, JUNE 01, 2015: THE revenue is in appeal before the High Court against the order of Tribunal reported in 2011-TIOL-1045-CESTAT-MUM

The assessee is engaged in the manufacture of excisable goods viz. motor vehicle parts falling under Chapter 87 of CETA, 1985 at their factory at Waluj, Aurangabad. The assessee availed CENVAT credit of Service Tax paid on repairs and maintenance service of their wind mills situated at Supa and Satara.

Contending that the credit so availed is inadmissible as the wind mills are situated far away from their factory located at Waluj, Aurangabad, proceedings were initiated for recovery of CENVAT. The lower adjudicating authority confirmed the demand along with interest and also imposed a penalty of Rs.6,66,856/-. The Commissioner (Appeals) upheld the lower adjudicating authority's order to the extent of confirmation of demand and interest but set aside the penalty.

The assessee appealed against the confirmation of demand and interest and the department is challenging the setting aside of the penalty. The Tribunal held that the assessee is entitled for CENVAT Credit.

On hearing both sides, the High Court held:

On perusal of these Rules (Rule 2(B)(k),(l) (m), 3 and 4 of CENVAT Credit Rules, 2004), it becomes clear that the management, maintenance and repair of windmills installed by the respondents is input service as defined by clause "l" 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.

Accordingly, the High Court dismissed the appeals by revenue.

(See 2015-TIOL-1371-HC-MUM-ST)