Gujarat High Court
M/S Meghdev Enterprises vs Commissioner Of Central Excise on 13 November, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/TAXAP/2599/2010 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. 2599 of 2010
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
==========================================================
Approved for Reporting Yes No
✓
==========================================================
M/S MEGHDEV ENTERPRISES
Versus
COMMISSIONER OF CENTRAL EXCISE
==========================================================
Appearance:
MR D K TRIVEDI(5283) for the Appellant(s) No. 1
MR ANKIT SHAH(6371) 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. D.K.
Trivedi for the appellant and learned
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
advocate Mr. Ankit Shah for the
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 15.10.2010 passed by the
Customs, Excise and Service Tax Appellate
Tribunal, West Zonal Bench at Ahmedabad
(For short "the Tribunal") in Appeal
No.E/1327 & 1388/2009.
3. The appeal is admitted by this Court
vide order dated 23.06.2011 for
consideration of the following substantial
questions of law:
"(A) Whether on the facts and
circumstances of the case, the
CESTAT is correct in holding that
the services received in respect
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
of setting up the captive wind
mill plant are not entitled for
the Cenvat Credit under rule 2(l)
of the Cenvat Credit Rules, 2004?
(B) Whether on the facts and
circumstances of the case, the
CESTAT is correct in rejecting the
appeal 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?
(C) Whether on the facts and
circumstances of the case, the
Appellant Tribunal is correct in
rejecting the appeal of the
Appellants on the ground that the
services received in respect of
generation of electricity a non
excisable product 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 company was engaged in
manufacture and clearance of decorative
laminate sheets falling within Chapter 48
of the Central Excise Tariff. The
appellant was holding Central Excise
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
Registration and was paying duty of
Central Excise regularly. The appellant is
also availing the benefits of credit of
Central Excise Duty paid on inputs and
capital goods received in their factory as
also credit of service tax paid on various
input services used by them in or relation
to manufacture and clearance of dutiable
final product.
5. The appellant had entered into a
contract with Paschim Gujarat Vij Co. Ltd.
by virtue of which the appellant was
required to install wind mill at a
notified place and use the same in
generation of electricity. On doing so,
the appellant would get the exemption from
payment of electricity bill in ratio with
the energy wheeled out by them through the
said wind mill.
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
6. The installation of wind mill was
done by M/s. Suzlon Infrastructure
Services Ltd. and towards the said
installation of wind mill, the appellant
was required to pay charges/ consideration
to the said M/s. Suzlon Infrastructure
Services Ltd. M/s. Suzlon had issued
various invoices in favour of the
Appellant.
7. The appellant was made aware that
Service Tax was paid by said M/s. Suzlon
Infrastructure Services Ltd. at applicable
rates and following the same, they had
mentioned the said amount of Service Tax
in the invoice and were asking
reimbursement of the same from the
appellant.
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
8. It is the case of the petitioner that
by virtue of Rule-3 Cenvat Credit Rules,
2004, the appellant were eligible to avail
credit of said Service Tax paid by M/s.
Suzlon Infrastructure Services Ltd. and
accordingly, the appellant had taken
credit of the said amount of Service Tax.
9. The Appellant had also written a
letter dated 17/12/2007 to the Assistant
Commissioner, Central Excise,
Surendranagar, vide which they had
informed about the said amount of Service
Tax credit taken by them and also informed
the said authority that they may not
utilize the said credit until such time,
the same is allowed by the Authority.
10. The appellant thereafter received a
Show Cause Notice whereby it was alleged
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
that since the installation of wind mill
was at Kutch and not within the factory
premises, the appellant was not eligible
to avail the credit of Service Tax and
accordingly and therefore, the appellant
were called upon to show cause as to why
the Cenvat Credit of Rs.3,68,792/- should
not be recovered from them under
provisions to Rule-14 of Cenvat Credit
Rules, 2004 read with the proviso to
Section-11A of Central Excise Act, 1944,
penalty as per the provisions of Rule-
15(3) of the Cenvat Credit Rules, 2004
read with Section-11AC of Central Excise
Act, 1944 should not be imposed on them
for the contravention of Rule-4 of Cenvat
Credit Rules, 2004; interest as applicable
at the material time should not be
recovered from them under Rule-14 of
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
Cenvat Credit Rules, 2004 read with
Section-11AB of the Central Excise Act,
1944.
11. On receiving the Show Cause Notice,
the appellant filed a detailed reply
dated 30.7.2008, wherein they had
contended that the appellant has a factory
situated at Surendranagar wherein they are
manufacturing laminated sheets falling
under Chapter-48 fo the Central Excise
Tariff, they are registered with the
Central Excise Department and are paying
duty of Central Excise regularly and in
terms of Rule-4 (7) of Cenvat Credit
Rules, 2004 they are eligible to avail
Cenvat Credit in respect of Input Service
on or after the day on which the payment
was made towards the value of said Input
Services at the Service Tax paid or
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
payable was indicated in invoice, bill or
Challan referred to in Rule-9 of Central
Excise Rules, 2002.
12. Subsequently, the appellant was called
for personal hearing, which was attended
by their Advocate on 16.1.2009, during
which the learned Advocate had reiterated
the submission made vide the reply.
13. However, the adjudicating authority
passed the Order-In-Original dated
23.1.2009 holding that the appellant had
availed the services from M/s. Suzlon
Infrastructure Services Ltd. for
installation of wind mill at Kutch and
paid Service Tax for said availment of
service, the electricity generated at the
said wind mill was being supplied to GEB
(Patchim Gujarat Vij Co. Ltd.) and in view
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
of the same, GEB provided exemption to the
appellant on electricity charges at their
factory at Surendranagar but the service
availed for installation of wind mill had
no relation with the manufacture of Final
product at Surendranagar directly or
indirectly for the availment of Input
Service credit and according to the
definition of input Service, service
availed by the appellant at Kutch and
credit of Service Tax paid for such
service is not admissible at their unit at
Surendranagar as there was no direct or
indirect relation between such availment
service at Kutch and manufacture of Final
product at Surendranagar and therefore,
the credit so availed was required to be
recovered. Accordingly, the Adjudicating
Authority confirmed the demand of
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
Rs.3,68,792/- and ordered its recovery
under the provision of Rule-14 of Cenvat
Credit Rules, 2004 read with SECtion-11A
of Central Excise Act, 1944 along with
interest under SECtion-11AB and imposed a
penalty of Rs.2000/- under Rule-15(3) of
Cenvat Credit Rules, 2004.
14. Being aggrieved and dissatisfied by
the said order, the appellant had
preferred an appeal before the learned
Commissioner (Appeals), Customs and
Central Excise, Rajkot. The
Commissioner(Appeals) vide impugned order
dated 05.05.2009 set aside the order of
the lower authority so far as it is
related to imposition of penalty of
Rs.2000/- on the Appellant under Rule-15
(3) of Cenvat Credit Rules, 2004 and
dismissed the appeal so far as the
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
admissibility of credit of Service Tax in
question was concerned.
15. Being aggrieved and dissatisfied by
the same, the Appellant had preferred an
appeal before the Tribunal. The Tribunal
vide order dated 15.10.2010 had rejected
the appeal filed by the Appellant
following the Tribunal's decision in the
case of Rajhans Metal Pvt. Ltd. v/s.
Commissioner of Central Excise, Rajkot
reported at 2007(8) STR 498 (Tri-
Ahmedabad) observing as under:
"Both the appeals are being
disposed off by a common order as
the issue involved is identical.
2. Both the appellants are engaged
in the manufacture of excisable
goods and have installed one wind
mill for generation of electricity
at a long distant place from their
factory. The issue under
consideration relates to availment
of cenvat credit of service tax
paid in relation to the services
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
utilised for wind mill farm
project. The same stands denied to
the appellants on the ground that
wind mill as also the factory are
two independent units, one engaged
in manufacture of excisable goods
and the other for generating
electricity. As such the services
obtained at the wind mill cannot
be held to be input services so as
to allow the cenvat credit of
service tax.
3. The details of the matter are
not being gone into in as much as
both sides agree that identical
issues stand decided by the
Tribunal in the precedent
decisions. Reliance in this regard
is made to the Tribunal's decision
in the case of Rajans Metals Pvt.
Ltd. Vs. CCE Rajkot reported in
2007 (8) STR 498 (Tri. Ahmd.). The
learned advocates appearing for
the appellants fairly agree that
the said decision of the Tribunal
stands subsequently followed in
number of other decisions. Having
also Both sides aving also agreed
that though a tax appeal filed
against the above order stands
admitted by the Hon'ble High Court
of Gujarat but there is no interim
order staying the operation of the
said decision.
4. As such by following the above
decision, I find no merits in the
appellants' appeals. The same are
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
accordingly rejected. I also note
that the Commissioner (Appeals)
has fairly held that the
appellants are liable to pay
interest only in respect of the
amount of credit utilised by them.
He has also dropped penalty in
respect of both the appellants, by
following the earlier decision of
the Tribunal in the case of Rajans
Metals.
5. In view of the foregoing, the
credit availed by both the units
is rejected."
16. Learned advocate Mr. D.K. Trivedi
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.
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
17. It was submitted that the electricity
generated by the Wind Mills was utilised
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.
18. 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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
immediately even though place of
generation and manufacturing are different
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.)
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
4) Parry Engg. & Electronics P. Ltd. v.
C.C.E. & S.T., Ahmedabad-I,II,III reported
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)
19. 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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
respondent assessee. It was therefore,
submitted that the service tax paid by the
appellant on the installation and erection
of the Wind Mill is required to be given
credit under the provisions of the Rules.
20. 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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
of electricity generated by Wind Mills,
the appellant was entitled to the credit
of service tax.
21. On the other hand, learned advocate
Mr. Anikit 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.
22. Having heard the learned advocates for
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
the respective parties and having
considered the facts of the case, the
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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
(ii) installation of-
(a) electrical and electronic
devices, including wirings or
fittings therefor; or
(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,
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
and includes services used in
relation to setting up,
modernization, renovation or
repairs of a factory, premises of
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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
indirectly, in relation to the
manufacture of final products and
clearance of final products from
the place of removal.
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.
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
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 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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
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:
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
"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 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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
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."
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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
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,
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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
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. 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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
(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 in
relation to manufacture of
final product, but also
includes various services used
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
physically missing in Rule
2(1), 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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
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."
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
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
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
accordingly allowed."
23. 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
