TMI Blog2008 (10) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... ties of equal amount imposed under Rule 15 of the CCR read with Section 11AC of the Act vide orders impugned in both the captioned appeals. The details of the demands and penalties are as follows:- Appeal No. Impugned order Service Tax Rs. Penalty Rs. Period of dispute E/231/08 19/08 dt. 29-1-08 2,05,047/- 2,05,047/- November '05 to March '06 E/232/08 11/08 dt. 23-1-08 4,80,621/- 4,80,621/- September '04 to October '05 2. The facts of the case in brief are that LGB, manufacturers of automotive and industrial chains and its parts based in Coimbatore set up windmills at Nagercoil and Palladam. The power generated by the windmills is transferred to Tamil Nadu Electricity Board (TNEB) grid, which the assessee received for use in its manufacturing facility. LGB availed credit of service tax paid on account of erection/commissioning of windmill projects, security charges, annual maintenance co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CESTAT in CCE, Mumbai v. G.T.C Industries Ltd. in Final Order No. M/217-218/08/SMB/C-I/LB dated 25-9-08 [2008 (12) S.T.R. 468 (Tribunal)]. The appellants were eligible to take CENVAT credit of tax paid on all those input services which were connected with the business of a manufacturer. The appellants relied on the following cases: (i) Victor Gaskets India Ltd. Otrs. v. CCE - 2008 (10) S.T.R. 369 (Tribunal) = 2008-TIOL-409-CESTAT-MUM (ii) CCE, Hyderabad v. Deloitte Tax Services India Private Ltd. - 2008 (11) S.T.R. 266 (Tribunal) = 2008-TIOL-629-CESTAT-Bang. (iii) Keltech Engineers v. CCE, Mangalore - 2008 (10) S.T.R. 280 (Tri.-Bang.) (iv) Metro Shoes v. CCE, Mumbai - 2008 (10) S.T.R. 382 (Tri.-Mum.). That electricity was not excisable was not relevant for the issue on hand. It was settled that input/input services used in power plant was eligible if the final products were liable to duty. The appellants relied on the following case law:- (i) Final Order No. A/872/WZB/AHD dt. 25-4-08 [2009 (13) S.T.R. 167 (Tri.-Ahmd.) = 2009 (234) E.L.T. 367 (Tri.-Ahmd.)] (ii) Stay Order No. 775/08-Ex dated 7-8-08 (iii) Final Order No. A/871/WZB/AHD/08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for waiver and stay deserved to be dismissed. 6. I have carefully considered the submissions by both sides. The applications are for waiver arid stay as regards the demand of service tax credit, interest and penalties. It has been explained satisfactorily by the Counsel for the appellants that the surviving liability relates to demand for service tax credit incurred for setting up and maintenance of windmills and penalty imposed on the appellants. The appellants have taken the stand that as per the definition of input service it is not necessary that the same is received in the factory. Service tax paid for activities relating to business qualified for availing input service credit. As per Rule 3(i) of CCR, a manufacturer could take credit of tax paid on any input service received by the manufacturer. Input service included any service used by the manufacturer directly or indirectly, in or in relation to the manufacture of final product and clearance of the final product from the place of removal and included among others, services used in activities relating to business. In CCE, Hyderabad v. Deloitte Tax Services India Pvt. Ltd. [2008 (11) S.T.R. 266 (Tribunal) = 2008-T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as paid by the manufacturer for running Canteen. The Tribunal held that whether the cost of food was borne by the worker or by the factory, the same would form part of expenditure incurred by the manufacturer and would have a bearing on the cost of production. It was mandatory on the part of the factories to provide canteen facility as per the Factories Act. Therefore, employment of out-door caterer for providing catering services had to be considered as an input service relating to the business and CENVAT Credit in respect of the same would be admissible. In Hindalco Industries Ltd. v. CCE, Allahabad, Stay order No. 605/08-Ex dated 29-5-08 - 2008 (12) S.T.R. 337 (Tribunal), the Tribunal held that when the department had allowed the service tax credit of the GTA and Business Auxiliary Services availed by captive power plant and thereby treated the power plant as captive power plant and as part of the manufacturing unit, prima facie, there was no justification to deny service tax credit of the tax on insurance premium paid on captive power generation plant. In Indian Rayon Industries Ltd. v. CCE, Bhavnagar [2006 (4) S.T.R. 79 (Tri.- Mum.)], the Tribunal held that CCR d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce tax credit in the facts of the case. 10. The basic object underlying the CENVAT scheme is to avoid an entrepreneur having to pay tax on his product on a value indicating the same tax he incurred on his inputs. In an integrated VAT system, where the value addition at the hands of an entrepreneur alone is subjected to tax, input credit is allowed without distinction as to whether the input is service or goods. However nexus between the inputs and the final product is essential to grant the benefit. The press note of the Government underlines this object served by the CENVAT scheme. In this jet age, a manufacturer incurs service tax on multifarious activities in the conduct of his business as found in the decisions of the Tribunal cited by the ld. Counsel. Such tax qualifies for credit as input service if the same is shown to have been incurred in relation to 'activities relating to business' as specifically included in the definition of input service in Rule 2(1) of CCR. In the instant case, electricity is an input of the assessee. If part or whole of the power requirement of the assessee's manufacturing facility is shown to have been met by the entire power gener ..... X X X X Extracts X X X X X X X X Extracts X X X X
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