M/S Ajanta Limited vs Commissioner Of Central Excise

Gujarat High Court

M/S Ajanta Limited vs Commissioner Of Central Excise on 13 November, 2025

Author: Bhargav D. Karia

Bench: Bhargav D. Karia

                                                                                                                 NEUTRAL CITATION




                        C/TAXAP/194/2009                                       CAV JUDGMENT DATED: 13/11/2025

                                                                                                                  undefined




                                                                           Reserved On   : 15/10/2025
                                                                           Pronounced On : 13/11/2025

                                   IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                                 R/TAX APPEAL NO. 194 of 2009


                      FOR APPROVAL AND SIGNATURE:


                      HONOURABLE MR. JUSTICE BHARGAV D. KARIA

                      and
                      HONOURABLE MR. JUSTICE PRANAV TRIVEDI

                      ==========================================================

                                  Approved for Reporting                       Yes            No
                                                                                              ✓
                      ==========================================================
                                                  M/S AJANTA LIMITED
                                                         Versus
                                            COMMISSIONER OF CENTRAL EXCISE
                      ==========================================================
                      Appearance:
                      MR ANAND NAINAWATI(5970) for the Appellant(s) No. 1
                      PARAM V SHAH(9473) for the Opponent(s) No. 1
                      ==========================================================

                         CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                               and
                               HONOURABLE MR. JUSTICE PRANAV TRIVEDI


                                                CAV JUDGMENT

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr. Anand Nainawati for the appellant and learned advocate Mr. Param V. Shah for the Page 1 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined respondent.

2. This Tax Appeal is filed under section 35G of the Central Excise Act, 1944 (For short "the Act") arising out of the final order dated 29.04.2008 passed by the Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad (For short "the Tribunal") in Appeal No.E/20/2008.

3. The appeal is admitted by this Court vide order dated 29.01.2010 for consideration of the following substantial questions of law:

"(1) Whether on the facts and circumstances of the case, the CESTAT is correct in holding that the services received in respect of operation, maintenance of captive wind mill plant are not entitled for the Cenvat credit under rule 2(1) of the Cenvat Credit Rules, 2004?

NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined (2) Whether on the facts and circumstances of the case, the CESTAT is correct in rejecting the appeal of the appellants on the ground that in order to qualify under the definition of input service, the service has to be received in the factory of production?

(3) Whether on the facts and circumstances of the case, the CESTAT is correct in rejecting the appeal of the appellants on the ground that the services received in respect of generation of electricity which is used in or in relation to the manufacture of dutiable products, are not entitled for Cenvat credit?"

4. Brief facts of the case are that the appellant is a company engaged in the manufacture of electronic products falling under Chapters 85 and 91 of the Central Excise Tariff Act, 1985. The products manufactured by the appellants attract excise duty. The appellants have its factory at Morbi.

NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined

5. The appellant had set up a wind farm at village Bhogat which is approximately 225 km away from the factory premises. The Appellant entered into an agreement with Gujarat Electricity Board (GEB) for transmitting the power from wind mill site to the factory premises. As per the arrangement with GEB, the electricity generated at wind farm was to be supplied to GEB which in turn supply the electricity to the factory after deducting wheeling charges.

6. It is the case of the appellant that the GEB adjusts the number of units supplied by wind farm while raising the bills for the consumption of electricity in the factory.

NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined

7. For the purpose of operation and maintenance of the wind farm located at Bhogat, the appellant had entered into an agreement with M/s Suzlon Energy Ltd (hereinafter referred to as "Suzlon") whereby the appellant received maintenance and repair service and reimbursed the service tax amount paid by Suzlon on such services. The Appellant availed Cenvat credit of such service tax amount as input service.

8. A show cause notice dated 16.01.2006 was issued to the appellant denying the Cenvat credit of Rs. 6,34,684/- being availed by the appellant on the maintenance or repair services received at the windmill site stating that the Page 5 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined services received at windmill site were not input services inasmuch as the electricity generated at windmill site was not used in the manufacture of dutiable products and the windmill farm located at a distance from the factory of production.

The show cause notice also proposed to impose the penalty under Rule 15 of the Cenvat Rules.

9. In response to the show cause notice, the appellants filed a detailed reply contending that the services received at wind farm qualified as input service since such services were used directly or directly in the manufacture of final products. It was also contended that the wind farm has been set up in accordance with the policy of the State Government Page 6 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined and the electricity generated at wind farm is entirely used in the manufacture of dutiable products. Hence the appellants are entitled for the Cenvat credit.

10. The adjudicating authority passed the order-in-original dated 31.08.2006 holding that the services received at wind mill plant are input service and the appellant is entitled for Cenvat credit and accordingly, the adjudicating authority dropped the proceedings.

11. Being aggrieved by the order-in-

original, the Revenue preferred an appeal before the Commissioner (Appeals) Rajkot on the ground that the services received by the appellant at windmill site is not input services and the activity of Page 7 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined producing electricity at wind mill site and consumption of the same at the factory are two independent activities and therefore, the services received at wind mill site are not the input services.

12. The respondent no.1 Commissioner (Appeals) passed the impugned order-in-

appeal dated 28.09.2007 and allowed the appeal of the Revenue confirming the denial of the Cenvat credit on the input services received at wind mill plant relying on the judgment of the Tribunal in case of Rajhans Limited (Final Order No. A/2438/WZB/AHD/07 dated 07.09.2007).

13. Being aggrieved by the impugned order-in-appeal, the appellant preferred an appeal before the Tribunal.

NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined

14. The Tribunal dismissed the appeal observing as under:

"11. After a detailed consideration of all the points raised by both the parties, I find no reason to differ from the two orders already passed by this Tribunal on the same subject in identical situation. The apex court's judgment in M/s.Vikram Cement's case does not help the appellants since the power plant is not a captive power plant. The Tribunal has already examined and considered the fact that power is delivered by electricity board after charging wheeling charges and decision has been taken that credit is not admissible in such situation. Input services have been received in the power plant belonging to the applicants but the power has been delivered to the electricity board. The transaction of delivery of power to the electricity board and sale of power by the electricity board with the assessee are two independent transactions. The electricity board is only giving credit for the power received in the grid and it does not mean that there is a direct nexus between the service received in the power plant and the items manufactured in the factory belonging to the Page 9 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined appellants. In view of the totally independent transactions unrelated to each other and in view of the fact that the power produced at the wind mill and power requirement of the factory also need not have to be matched or tallied, I do not think that the appellants are eligible for the benefit. In view of the above, I reject the appeals filed by both the appellants."

15. Learned advocate Mr. Anand Nainawati appearing for the appellant submitted that only ground on which Cenvat Credit is denied by the respondent authorities and as upheld by the Tribunal is that the electricity was being generated in Wind Mills far away from the factory premises and as electricity is not excisable, Cenvat Credit is not available even at the premises of the Wind Mills.

16. It was submitted that the electricity generated by the Wind Mills was utilised Page 10 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined by the appellant in its manufacturing unit through GEB. It was submitted that the agreement with GEB was only for the purpose of utilising the power generated by the Wind Mills for consumption at factory for manufacturing purpose which is connected through GEB Power Grid/High tension supply lines.

17. It was submitted that the appellant was already paying charges for excess use of power from GEB in addition to power generated by the Wind Mills transmitted through GEB power grid. It was therefore, submitted that there is nexus between the power generated through Wind Mills and the goods manufactured as three activities i.e sale, supply and consumption takes place immediately even though place of generation and manufacturing are different Page 11 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined and therefore, the appellant is entitled to avail the credit of service charges incurred in relation to the Wind Mills. In support of his submission, reliance was placed on the following decisions:

1) Commissioner of Central Excise v.

Excel Crop Care Ltd. reported in 2018 (12) STR 436 (Guj.).

2) C.C.E. & Cus., Aurangabad v. Endurance Technology Pvt. Ltd. reported in 2017 (52) S.T.R. 361 (Bom.)

3) Commissioner of C. Ex. & S.T., Chennai v. Ashok Leyland Ltd. reported in 2019(369) E.L.T. 162 (Mad.)

4) Parry Engg. & Electronics P. Ltd. v.

C.C.E. & S.T., Ahmedabad-I,II,III reported Page 12 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined in 2015(40) S.T.R. 243 (Tri.-LB)

5) Endurance Technologies P. Ltd. v.

Commr of C. Ex., Aurangabad reported in 2011 (273) E.L.T. 248 (Tri.-Mumbai)

18. It was submitted that this Court in case of Excel Crop Care Ltd.(supra) after considering the provisions of the Act and the Rules and more particularly, definition of "input service" as defined in Rule 2(l)(i) of the Rules held that mobile service provider, who is liable to pay service tax and recovers the same by adding such service tax in his bill, is the person providing taxable service and is rendering "output service" so as to constitute "input service" in the hands of respondent assesse. It was therefore, submitted that the service tax paid by the Page 13 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined appellant on the installation and erection of the Wind Mill is required to be given credit under the provisions of the Rules.

19. Reliance was also placed on Circular No.97/8/2007-S.T. dated 23.08.2007 more particularly, clause 8.3 thereof in which doubt raised regarding the admissibility of the Cenvat Credit on service tax paid in respect of mobile phones was answered to the effect that in the Rules, no condition has been prescribed with regard to admissibility of credit of service tax only on telephone connection installed in the business premises. It was therefore, submitted that the for the electricity utilised for manufacturing by the appellant provided by GEB against supply of electricity generated by Wind Mills, the appellant was entitled to the credit Page 14 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined of service tax.

20. On the other hand, learned advocate Mr. Param V. Shah for the respondent reiterated the contentions raised before the Tribunal and submitted that there is no connection between the electricity generated at the place of installation of Wind Mills by the appellant and the manufacturing activity taking place at its factory as the electricity is being received through GEB. It was pointed out that the electricity itself is not excisable and therefore, service tax credit is rightly rejected by the Tribunal.

21. Having heard the learned advocates for the respective parties and having considered the facts of the case, the Page 15 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined issue on hand has already been decided by this Court by order of even date in Tax Appeal No.1037 of 2008, wherein it has been held as under:

"18. Having heard the learned advocates for the respective parties and having considered the facts of the case, it would be germane to refer to the relevant provisions of the Act and the Rules.

Finance Act, 1994:

"65(29) - "commissioning and installation agency" means any agency providing service in relation to erection, commissioning or installation."

"(39a) "erection, commissioning or installation" means any service provided by a commissioning and installation agency, in relation to,-

(1) erection, commissioning or installation of plant, machinery or equipment; or

(ii) installation of-

(a) electrical and electronic devices, including wirings or fittings therefor; or Page 16 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined

(b) plumbing, drain laying or other installations for transport of fluids; or

(c) heating, ventilation or air-

conditioning including related pipe work, ductwork and sheet metal work; or

(d) thermal insulation, sound insulation, fire proofing or water proofing; or

(e) lift and escalator, fire escape staircases or travelators; or

(f) such other similar services;"

Cenvat Credit Rules, 2004 :

"Rule 2(l)"input service" means any service, -

(i) used by a provider of taxable service for providing an output service, or

(ii) 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, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of Page 17 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;"

Rule (4) Conditions for allowing CENVAT credit (1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service."

19. Definition of term "input service" as appearing in Rule 2(l) of the Rules would also include any service used by a provider of taxable services for providing an output service, or used by the manufacturer, whether directly or indirectly, in relation to the manufacture of final products and clearance of final products from the place of removal.

NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined

20. In the facts of the case, the appellant has utilised the electricity supplied by GEB against the electricity generated by Windmills and therefore, service tax paid by the appellant on the installation, erection and services in connection with maintenance of the Wind Mills are exclusively used in relation to manufacturing activity and therefore, the same would be squarely covered under the definition of "input service", as the management, maintenance and repair of Windmills installed by the appellant would fall within "input service" as defined by clause (l) of Rule 2 read with Rule 4 of the Rules which provides that any input or capital goods received in factory or any input services received by the manufacturer of final product would be susceptible to Cenvat Credit.

21. It is pertinent to note that there is no provision in the Rules which stipulates that input services received by the manufacturer must be received by the manufacturer at the factory premises.

22. This Court in case of Excel Crop Care Ltd. (supra) while considering the question as to the allowability of Cenvat Credit on mobile services after considering Rule 2(l) of the Rules held that the mobile service provider who is liable to pay service tax and recovers the same by Page 19 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined adding such service tax in his bill, is the person providing taxable service and is rendering output service so as to constitute input service in the hands of the assessee and therefore, the ground on which the credit was disallowed as the phones were not installed in the factory premises was held to be a ground not germane to the provisions of the Rules.

23. The Hon'ble Bombay High Court in case of Endurance Technology Pvt. Ltd.(supra) on similar issue of allowability of Cenvat Credit on electricity generated from the Windmills has held 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 Page 20 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined 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 Page 21 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined means any services of the description falling in subclauses (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 Page 22 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined 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 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."

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6. In view of this discussion, we have no hesitation to hold that the answer to question No. (1) 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."

24. Similarly, Hon'ble Madras High Court in case of Ashok Leyland Ltd. (supra) after considering the decision of Bombay High Court in case of Endurance Technology Pvt. Ltd.(supra) held as under:

"17. Thus, we are to consider as to whether there has been any nexus between the energy generated and the manufacturing activity of the assessee. This very issue was considered in Endurance Technology Pvt. Ltd. (supra). In fact, we find two substantial questions of law framed for consideration in Endurance Technology Pvt. Ltd. (supra), which are more or less identical to that of the questions of law framed in these appeals.

The first question framed for consideration was whether the assessee is entitled to avail Cenvat credit on management, Page 24 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined 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 input services, the Hon'ble Supreme Court referred to the decisions of the High Court of Bombay in the case of Commissioner of Central Excise, Nagpur v.

NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined Ultratech Cement, 2010 (20) S.T.R. 589 (Bom.); Commissioner of Central Excise, Nagpur v.

Ultratech Cement Ltd., 2010 (260) E.L.Τ. 369 (Bom.); and Deepak Fertilizers & Petrochemicals Corporation Ltd. v. C.C. Ex. Belapur, 2013 (32) S.T.R. 532 (Bom.). The Hon'ble Supreme Court, after taking note of the relevant rules, held that it becomes clear that management, maintenance and repair of windmills installed by the respondents is input service as defined in Clause I of Rule 2. It was held that Rules 3 and 4 provide that any input or capital goods received in the factory or any input service received for manufacture of final product would be susceptible to Cenvat credit. Further, it was held that Rule does not say that input service received by a manufacturer must be received at the factory premises and the decisions relied on also interpret the word "input service"

in similar fashion.

19. Further, by referring to the decision in Commissioner of Central Excise, Nagpur v. Ultratech Cement, 2010 (20) S.T.R. 589 (Bom.) (supra), it was held that the definition of "input service" is very wide and covers not only services which are directly or indirectly used in or Page 26 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined in relation to manufacture of final product, but also includes various services used in relation to business of manufacture of final product. Further, the expression "activities" in relation to business was also discussed in the said decision following the decisions of the Apex Court.

xxx

25. As already pointed out, there is no dispute that the electricity generated by the windmills are exclusively used in the manufacturing unit for final products, there is no nexus between the process of electricity generated and manufacture of final products and there is no necessity for the windmills to be situated in the place of manufacture. Further, as already noticed, the definition of "input service" is wider than the definition of "input". Furthermore, if one takes a look at the Rules, more particularly Rule 2(k), as it stood prior to 1-4-2011, which defines "input", the following has been specifically inserted.

                                               "within      the                factory                    of
                                               production".

                                               However,    these    words   are

physically missing in Rule 2(1), Page 27 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined 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(1) 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."

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25. In view of above settled legal position and in absence of words "within the factory of production"

in Rule 2(l) which defines "input service" which would mean that any service used by a provider of taxable service for providing an output service or used by the manufacturer whether directly or indirectly, or in relation to the manufacture of final product and clearance of final product from the place of removal, the definition of 'input service' has to be widely construed and therefore, the appellant would be entitled to the credit of service tax paid on inputs or capital goods or services received for Windmills for goods manufactured in the factory because only stipulation is that the input service should be received by the manufacturer of products.

26. Therefore, in view of decision of this Court in case of Excel Crop Care Ltd. (supra) we are in respectful agreement with the decision of Hon'ble Bombay High Court in case of Endurance Technologies P. Ltd. (supra) as well as decision of Hon'ble Madras High Court in case of Ashok Leyland Ltd. (supra).

27. In view of foregoing reasons, we answer the questions of law in favour of the appellant assessee and against the Revenue. Appeal is Page 29 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025 NEUTRAL CITATION C/TAXAP/194/2009 CAV JUDGMENT DATED: 13/11/2025 undefined accordingly allowed."

22. Adopting the same reasoning, we answer the questions of law in favour of the appellant assessee and against the Revenue. Appeal is accordingly allowed.

(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) RAGHUNATH R NAIR Page 30 of 30 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:10:16 IST 2025