PARRY ENGG. & ELECTRONICS P. LTD. Vs. C.C.E. & S.T.
LAWS(CE)-2015-7-50
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on July 29,2015

Parry Engg. And Electronics P. Ltd. Appellant
VERSUS
C.C.E. And S.T. Respondents




JUDGEMENT

P.K.DAS,MEMBER (J) - (1.)BY Interim Order No. 3/WZB/AHD/2013, dated 30 -9 -2013, the matter was referred to the Hon'ble President to constitute a Larger Bench to resolve the controversy arising out of the different views expressed by two Division Benches of the Tribunal in the case of Rajhans Metals Pvt. Ltd. v. CCE Rajkot - : 2007 (8) S.T.R. 498 (Tri. -Ahmd.) and in the case of Endurance Technologies Pvt. Ltd. v. CCE Aurangabad - : 2011 (273) E.L.T. 248 (Tri. -Bom.) : 2012 (27) S.T.R. 320 (Tri. -Bom.) The issue involved in these appeals is whether an assessee is eligible to avail Cenvat credit of an amount paid as Service Tax by service provider in respect of installation and erection, maintenance or any other services rendered at Windmills, which are located away from the factory premises and the electricity generated out of such Windmills is consumed at the factory premises after such power is put through the common grid. Heard both the sides and perused the records.
For the proper appreciation of the case, we take up the facts of the case in Appeal No. E/871/2011 (M/s. Parry Engineering & Electronics Pvt. Ltd. v. CCE Ahmedabad -II). In that case, the Appellant/Assessee was engaged in the manufacture of excisable goods viz. TMT Bars, T -Section, Round, Square Channel, Steel Doors etc, classifiable under Chapters 72 and 73 of the Schedule to the Central Excise Tariff Act, 1985, at their factory premises situated at GIDC Industrial Estate, Naroda, Ahmedabad under proper Central Excise registration certificate. They had paid Service Tax to the service provider on installation and erection of Windmills located at P -1, Ghadavi, Jamnagar and availed Cenvat credit at their factory at Ahmedabad. It is contended by the appellant that the electricity generated by the Windmills located at Jamnagar was transferred by the Gujarat Energy Transmission Corporation Ltd. to their manufacturing unit at Ahmedabad. The appellant was using the electricity generated by the said Windmills indirectly for the manufacture of their final product, cleared on payment of duty. According to the Revenue, the appellant is not eligible to avail the Cenvat Credit as the electricity is being generated in Windmills at Jamnagar, far away from the factory premises based at Ahmedabad. Further, the electricity as such is not excisable and whatever electricity is generated is transferred to Gujarat Electricity Board, who in turn, is providing electricity to the Appellant and raising bills which is being consumed for manufacture of their goods. The Appellant reversed the credit at the instance of the audit officers and filed refund claim. The Adjudicating authority rejected the refund claim. The Commissioner (Appeals) also rejected the appeal filed by the Appellant and upheld the Adjudication order. The Commissioner (Appeals) passed the order following the decision of the Tribunal in the case of Rajhans Metals Pvt. Ltd. (supra). In that case, it has been held that CENVAT Credit of Service Tax, paid on erection/commissioning, maintenance or repair and storage charges in respect of set up Windmills for generation of electricity, away from the factory site, is not admissible. The decision of the Tribunal in the case of Rajhans Metals Pvt. Ltd. (supra) was followed in Lanxess ABS Ltd. - : 2010 (259) E.L.T. 551 (Tri -Ahmd.) : 2011 (22) S.T.R. 587 (Tri. -Ahmd.).

(2.)THE another Co -ordinate Bench of the Tribunal in the case of Endurance Technologies Pvt. Ltd. (supra) had taken diametrically opposite view, which was followed by the Tribunal in the case of Rajratan Global Wires Pvt. Ltd. - : 2012 (26) S.T.R. 117 (Tri. -Del.). The learned Advocate on behalf of the appellant submits that the Revenue filed appeal before the Hon'ble Bombay High Court against the decision of the Tribunal in the case of Endurance Technologies Pvt. Ltd. (supra) which was dismissed as reported in, 2015 -TIOL -1371 -HC -MUM -ST (CCE Aurangabad v. Endurance Technology Pvt. Ltd.). The question of law before Hon'ble High Court in the case of Endurance Technology Pvt. Ltd. (supra) are as under: - -
"I. Whether the CESTAT is correct in holding that the assessee is entitled to avail the CENVAT Credit on "management, maintenance or repair services" provided on services provided to Windmills installed and situated away from factory and factory premises?

II. Whether electricity generated at Supa and Satara, situated far away, could be said to have been used for manufacture of the final product of the assessee at Waluj, Aurangabad."

(3.)HON 'ble High Court answered the question No. 2 in favour of the assessee, holding that the electricity generated at Supa and Satara which were situated far away from the manufacturing unit and the appellant used the electricity generated at Windmills for the manufacture of final product. It can be safely stated that the electricity generated at Supa and Satara is the electricity used at Waluj.
The other issue is whether the assessee was entitled to avail Cenvat credit on the input services namely Management, Maintenance or Repair Service on Windmills installed by the manufacturer far away from the factory premises. The Hon'ble High Court observed as under: - -

"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 used in or in relation to manufacture of final product but also includes various services used in relation to business of manufacture of final product. The expression "activities" in relation to business is also discussed in this judgment by referring to judgment of Apex Court.

In the case of Deepak Fertilizers & Petrochemicals Corporation Ltd. v. C.C. Ex. Belapur [Cited supra] the Division Bench held as under:

"The definition of the expression 'Input service' covers any services used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products. The words 'directly or indirectly' and 'in or in relation to' are words of width and amplitude. The subordinate legislation has advisedly used a broad and comprehensive expression while defining the expression 'input service'. Rule 2(1) initially provides that input service means any services of the description failing in sub -clauses (i) and (ii). Rule 2(1) then provides an inclusive definition by enumerating certain specified services. Among those services are services pertaining to the procurement of inputs and inward transportation of inputs. The Tribunal, proceeded to interpret the inclusive part of the definition and held that the Legislature restricted the benefit of Cenvat credit for input services used in respect of inputs only to these two categories viz. for the procurement of inputs and for the inward transportation of inputs. This interpretation which has been placed by the Tribunal is ex -facie contrary to 'the provisions contained in Rule 2(1). The first part of Rule 2(1) inter alia covers any services used by the manufacturer directly or indirectly, in or in relation to the manufacture of final products. The inclusive part of the definition enumerates certain specified categories of services. However, it would be farfetched to interpret Rule 2(1) to mean that only two categories of services in relation to inputs viz. for the procurement of inputs and for the inward transportation of inputs were intended to be brought within the purview of Rule 2(1). Rule 2(1) must be read in its entirety. The Tribunal has placed an Interpretation which runs contrary to the plain and literal meaning of the words used in Rule 2(1). Moreover as we have noted earlier, whereas Rule 3(1) allows a manufacturer of final products to take 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 is concerned, the only stipulation is that it should be received by the manufacturer of the final product. This must be read with the broad and comprehensive meaning of the expression 'input service' in Rule 2(1). The input services in the present case were used by the appellant whether directly or indirectly, in relation to the manufacture of final products. The appellant, it is undisputed, manufactures the dutiable final products and the storage and use of ammonia is an intrinsic part of that process."

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