Case Law Details
Ramco Cements Ltd. Vs Commissioner of Central Excise (CESTAT Chennai)
Appellants are with the suppliers of fly ash. It is seen that appellants are installing PDFACS systems in the factories of thermal plants and contract for maintenance providing man power etc. is given to the respective suppliers. These suppliers do maintain such systems and transport fly ash collected at the end of thermal power units. We find that it is not the case of the department that appellants are not using the fly ash in the manufacture of cement i.e final product. The maintenance of PDFACS systems by the contractors or the appellants in terms of thermal power station is undoubtedly under round the clock collection and supply of fly ash.
Therefore, it is evident that service rendered by the contractors of the appellants are certainly in or in relation to the manufacture of cement by the appellant. As long as the services are used directly or indirectly in the manufacture of dutiable products by the appellants such services are to be deemed to be services rendered to them and the input services for that purposes.
We find that Tribunal has been consistently taking the view that the service rendered directly and used in the primary activity of the appellant or eligible to be treated as input service. We find that the case law cited by the appellant in their defence is exactly on the issue before us for consideration. The Tribunal in the case of Birla Corporation Ltd. 2014 (34) STR 55 (Tri.-Del.) has held that services availed in respect of plant set up in the premises of NTPC for extraction and handling of fly ash is to be treated as service availed for procurement of inputs.
Ld. Counsel for the appellants also submits that in their own case for a later period, Ld. Commissioner (Appeals) has decided the issue in favour of the appellant in respect of Appeal No.72/2016-TRY (CEX). He also submits that there is no appeal filed by the Revenue against this order. Therefore, it is to be considered that the issue has attained finality.
In view of the above, we find that the appellants are entitled to avail the input service credit on the activities performed by the contractors who are maintaining the systems to collect the fly ash generated in the thermal power plant.
FULL TEXT OF THE CESTAT JUDGEMENT
M/s.Ramco Cements Ltd. (earlier known as Madras Cements Ltd.) are manufacturers of cement by using fly ash. On verification of invoices issued by their service providers i.e. M/s.R.Muthulakshmi & Co., Metter Dam (ii) M/s.RR Engineering Services, Neyveli & (iii) M/s. Ramana Logistics, Chennai. it was noticed that they had charged the assessee in the invoices towards service provided by them for operation and maintenance of thermal power station. However, the appellants have taken credit on such invoices claiming that the same are input service to them. A show cause notice dt. 22.10.2013 was issued to the appellants demanding cenvat credit of Rs.52,77,007/-and seeking to impose the penalty under Rule 15 (2) of CCR 2004. The SCN was confirmed by Commissioner vide OIO No. 6/2014-ce dt.3.3.2014.
2. Ld. Consultant for the appellants submits that in terms of the agreement entered into by the appellants with their suppliers, the suppliers are required to maintain PDFACS system attached to respective boiler units of thermal power station and supply fly ash at the rate prescribed therein. The invoices raised by the appellant indicate the quantity of fly ash lifted and the service tax paid on the same. The appellant claim that in terms of the agreement, the agreement provides for collection and transport of fly ash round the clock exclusively for Madras Cements from the system installed by the company. He further submits that fly ash is the main raw material for them and any service rendered in respect of continuous supply of the same is a service rendered in relation to the procurement of raw material and therefore a service rendered in or in relation to the manufacturer of the fly ash in their factory. Relying on the Tribunal decision in the case of CCE Nagpur Vs Ultratech Cement Ltd. – 2010 (200 STR 683 (Tri.-Mumbai), Ld. Counsel submits that the Hon’ble Tribunal held in that case that nowhere it is mentioned that the input service credit is not available for the service utilized outside the factory premises; the denial of cenvat credit on the ground that services were received by the respondent in their factory premises, is not sustainable. He also relies on the following case laws:
(i) Birla Corporation Ltd. Vs CCE 2014-(34) STR 55 (Tri.Del.)
(ii) Birla Corporation Ltd. Vs CCE 2014 (34) STR 589 (Tri-Del.)
(iii) CCE Nagpur Vs Ultratech 2011 (21) STR 297 (Tri.-Mumbai)
(iv) RSWM Ltd. Vs CCE – 2015 (37) STR 1074 (Tri.-Del.)
(v) Metro Shoes Vs CCE 2008 (10) STR 382 (Tri.-Mumbai)
3. Per contra, Ld. A.R relies on the findings of the OIO and submits that the service is rendered in respect of the machinery installed by the appellants in the premises of thermal plant and as such have no nexus with the activity undertaken by taxguru.in the appellants in the factory for production of cement. She also submits that moreover the service, if any, rendered by the suppliers of fly ash are to be considered to be service rendered to thermal power stations and not to the appellants. Therefore, the appellants are not entitled to take credit on such services rendered by their suppliers.
4. Heard both sides and perused the records of the case. On going through respective agreements, we find that the appellants are with the suppliers of fly ash. It is seen that appellants are installing PDFACS systems in the factories of thermal plants and contract for maintenance providing man power etc. is given to the respective suppliers. These suppliers do maintain such systems and transport fly ash collected at the end of thermal power units. We find that it is not the case of the department that appellants are not using the fly ash in the manufacture of cement i.e final product. The maintenance of PDFACS systems by the contractors or the appellants in terms of thermal power station is undoubtedly under round the clock collection and supply of fly ash. Therefore, it is evident that service rendered by the contractors of the appellants are certainly in or in relation to the manufacture of cement by the appellant. As long as the services are used directly or indirectly in the manufacture of dutiable products by the appellants such services are to be deemed to be services rendered to them and the input services for that purposes. We find that Tribunal has been consistently taking the view that the service rendered directly and used in the primary activity of the appellant or eligible to be treated as input service. We find that the case law cited by the appellant in their defence is exactly on the issue before us for consideration. The Tribunal in the case of Birla Corporation Ltd. 2014 (34) STR 55 (Tri.-Del.) has held that services availed in respect of plant set up in the premises of NTPC for extraction and handling of fly ash is to be treated as service availed for procurement of inputs. Ld. Counsel for the appellants also submits that in their own case for a later period, Ld. Commissioner (Appeals) has decided the issue in favour of the appellant in respect of Appeal No.72/2016-TRY (CEX). He also submits that there is no appeal filed by the Revenue against this order. Therefore, it is to be considered that the issue has attained finality. In view of the above, we find that the appellants are entitled to avail the input service credit on the activities performed by the contractors who are maintaining the systems to collect the fly ash generated in the thermal power plant. In the result, the appeal filed by the appellants i.e. E/41114/2014 is allowed with consequential relief, if any.
(Operative part of the order pronounced in open court)
