We are sharing with you an important judgement of Hon’ble Mumbai High Court in the case of M/s Deepak Fertilizers and Petrochemicals Corpn. Ltd. Versus Commissioner of Central Excise [(2013] 32 taxmann.com 135 (Bombay)] on following issue:
Issue:
Whether Services in relation to erection, commissioning and installation of storage tank for storage of imported inputs/ammonia outside factory are eligible as input services?
Facts:
In the instant case, M/s Deepak Fertilizers and Petrochemicals Corpn. Ltd. (“the Company”) was engaged in the manufacture of excisable goods and provision of output services. The Company installed ammonia storage tank facility at its premises in Raigad for storage of imported ammonia, which was raw material meant for manufacturing of final product at its factory. The Company availed Cenvat credit of service tax paid on input services used in relation to erection, commissioning and installation of said storage tank. The Department denied credit arguing that services received in connection with the activity of installation of storage tank which was immovable property and outside factory premises were not input services.
Held:
The Mumbai High Court held in favour of the assessee that the Company was eligible to avail Cenvat credit of service tax paid on input services.
The Hon’ble High Court placed reliance on Rule 3(1) of Cenvat Credit Rules, 2004 (“the Credit Rules”). Rule 3(1) allows a manufacturer of final products to take credit inter alia of duty/service tax which is paid on:
i. any input or capital goods received in the factory of manufacturer of the final product; and
