The definition of 'input service' in Cenvat Credit Rules is broad and does not require services to be received at the manufacturing site to qualify for credit.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Mr. Anand Nainawati for the appellant and learned 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 07.09.2007 passed by the Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad (For short “the Tribunal”) in Appeal No.E/696/2007.

3. The appeal is admitted vide order dated 25.06.2009 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 setting up the captive wind mill plant are not entitled for the Cenvat Credit under rule 2(l) of the Cenvat Credit Rules, 2004?

2. 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?

3. Whether on the facts and circumstances of the case, the Appellate 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 was engaged in manufacture of alloy products falling under Chapter 74 of Central Excise Tariff Act, 1985 (For short “the Act,1985”) at its factory at Plot No. 21/3, GIDC Industrial Estate, Shanket Tekri, District Jamnagar, Gujarat.

5. The appellant was availing Cenvat Credit of inputs, capital goods and input services under the provisions of the Act and under the Cenvat Credit Rules, 2004 (For short “the Rules”). The appellant was regularly filing monthly ER-1 return along with other returns as prescribed under the Rules.

6. The appellant decided to install Wind Mills to generate electricity to be used for manufacturing of excisable goods by way of “Wheeling Agreement” entered with M/s. Gujarat Energy Transmission Corporation Ltd. (GETCO) in view of progressive power policy of the Gujarat Government.

7. The appellant purchased Windmill devices/equipments along with all necessary accessories from M/s. ENERCON (India) Ltd. and also authorised them for services of erection and commissioning of Wind Mills along with necessary civil construction.

8. Accordingly, while setting up of the Windmills, the appellant availed the services for the purpose of installation, erection and commissioning of the Windmills. The electricity generated at Windmills were fed to grid of Gujarat Electricity Board (GEB) on the basis of an agreement and the appellant received equal quantity of electricity fed by them from GEB at the factory site and whatever quantity of electricity is used in excess of what was produced was charged to the appellant by the GEB. The appellant claimed Cenvat Credit of the services availed at the Windmill station.

9. The adjudicating authority held that service tax paid in relation to the services availed for the purpose of the erection, commissioning of Wind Mills away from the factory site, cannot be taken as credit and the same was upheld by the Commissioner (Appeals) in the appeal preferred by the appellant.

10. Being aggrieved, the appellant preferred an appeal before the Tribunal contending that in terms of Rule 2(l) of the Rules, any service used by the manufactu