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TMI Blog2023 (12) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty. (iv) 22/Commr./CE/Kol-II/Adjn/2015-16 dated 18.03.2016 - involving Rs. 59,72,253/- along with interest and equal amount of tax as penalty. (v) 04/DC/CE/HD-I/2017-18 dated 02.05.2017 - involving Rs. 39,46,252/- along with interest and equal amount of tax as penalty. (vi) 43/ADC/CE/KOL-II/Adjn/2016-17 dated 11.11.2016 - involving Rs. 43,79,937/- along with interest and equal amount of tax as penalty. (vii) 03/DC/CE/HD-I/2017-18 dated 02.05.2017 - involving Rs. 39,81,428/- along with interest and equal amount of tax as penalty. As the issue involved in all these appeals are common, they are taken up together for decision. 2. There are two issues to be decided in these appeals. (i) Whether the Appellant is eligible to avail CENVAT Credit of Business Support Services received by them from ABMCPL (group company) for the period from April 2006 to March 2016? (ii) Whether the Appellant is eligible to avail CENVAT Credit on Mining Services received from Avian Overseas Pvt. Ltd. for the period from April 2006 to June 2011? This issue is to be decided only Appeal No. E/76266/2017. 3. In respect of the first issue mentioned above, 17,40,76,082/- has been confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed ('AOPL') at their Talabira-I mines, Sambalpur, which are captive mines obtained on of lease from the government. As per the admitted facts in impugned order, the services ancillary to mining of coal in the Appellant's mine was used for generation of electricity at their Captive Power Plant located in their factory at Hirakud, Sambalpur, Orissa. The said electricity is supplied to their manufacturing unit for use in manufacture of dutiable goods. Thus, the Appellant claimed the Cenvat credit on the said services since the same have intricate nexus with manufacturing. The Appellant also stated that to the extent the electricity is not used in production, the Cenvat credit was reversed. 7. The Appellant submits that in the impugned order, the adjudicating authority observed that AOPL was providing 'site formation services' and not 'mining services'. Hence, it has no nexus with the manufacturing process of excisable goods. The adjudicating authority has also observed that AOPL issued the invoices on the Appellant's mines and not the factory address/ registered premise. On these ground the credit availed by the Appellant was denied. 8. The Appellant submits that the findings regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for capital goods used in captive mines. Hindalco Industries Ltd. v. CCE, Allahabad, 2017 (52) S.T.R. 408 (Tri. - Del.) - input services used in captive power plant located outside factory. Hindustan Zinc Ltd. v. CCE, Jaipur-II, 2017 (9) TMI 271 - CESTAT New Delhi - consultancy services to lay laying pipelines for water supply to mine. Northern Coalfields Ltd. v. CCE, Bhopal, 2017 (5) G.S.T.L. 217 (Tri. - Del.) - tyre retreading and vehicle maintenance services used in mines. 11. Regarding the Invoices not addressed to the factory / registered premises, the Appellant submits that even if such invoices were addressed to the mines, the Cenvat credit ought not be denied thereon on account of such procedural infirmities, in the absence of any dispute as to usage of such services by the Appellant. In this regard, reliance is placed on the decision in the case of Karaikal Chlorates v. CCE, Puducherry, 2023 (69) GSTL 405 (Tri.-Chennai). Thus, the Appellant contended that Cenvat credit on the subject services obtained from AOPL in its captive mines cannot be denied. 12. The Ld. D.R. reiterated the findings in the impugned order. 13. Heard both sides and perused the appeal docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghtly paying Service Tax under BSS for the services rendered by them to their group companies. The department has also not disputed the payment of service tax by ABMCPL under the category of BSS. 12. The Appellant referred the Board Circular No.102/3/2009-S.T. dated 23.02.2009 and TRU's Letter No.334/4/2006-TRU, dated 28.02.2006 which clarified the scope of BSS. As per the Board Circular cited above, services which are in the nature of assistance or support provided by the principal to the service recipient would fall under BSS. In the present case, the services rendered by ABMCPL being in the nature of support service provided to the Appellant, qualify as BSS as defined under section 65(104c) of the Finance Act, 1994.The manner of arriving at the value of services rendered would not change the nature of BSS provided by ABMCPL i.e., whether ABMCPL only recovered the expenses incurred or even charged a profit element. Section 67 of the Finance Act, 1994 provides that value of any taxable service is the gross amount charged for such service provided. It neither restricts a service provider from allocating expenses to the recipients nor mandates charging profit margins in exchange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt are not sustainable and accordingly, we set aside the same. 16. The next issue to be decided is whether the Appellant is eligible to avail CENVAT Credit on Mining Services received from Avian Overseas Pvt. Ltd. for the period from April 2006 to June 2011? We observe that Cenvat credit amounting to Rs.11,85,22,981/- along with interest and penalty has been confirmed in the impugned order. The Appellant submits that they are entitled to avail all input services received and used in mines in accordance with the definition of 'input services'. We observe that the services ancillary to mining of coal in the Appellant's mine was used for generation of electricity at their Captive Power Plant located in their factory at Hirakud, Sambalpur, Orissa. The said electricity is supplied to their manufacturing unit for use in manufacture of dutiable goods. Thus, we observe that the services have intricate nexus with manufacturing of dutiable goods. The Appellant cited a plethora of decisions in support of their contention that the input services used in captive mines are available as credit to the manufacturing unit. 17. In the case of India Cements Ltd. v. CCE, Guntur, 2016 (45) S.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the input services on which Cenvat credit was availed and the manufacturing activity undertaken by the Appellant. Thus, we hold that the impugned order demanding reversal of such credit along with interest and penalty is not sustainable and accordingly, we set aside the same. 20. Regarding the grounds taken by the adjudicating authority to confirm the demands in the impugned order, we observe that the adjudicating authority has observed that AOPL was providing 'site formation services' and not 'mining services'. Hence, it has no nexus with the manufacturing process of excisable goods. We observe that the classification of service as either 'mining service or 'ancillary to mining service' or 'site formation services' is not relevant to determine the eligibility to Cenvat credit on the subject services, inasmuch as the services are used in the mines, coal extracted wherefrom has been used in their manufacturing unit. Accordingly, we hold that the demands cannot be confirmed on this ground. The adjudicating authority has also observed that AOPL issued the invoices on the Appellant's mines and not the factory address/ registered premise. On these ground the credit availed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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