Gujarat High Court
M/S Meghdev Enterprises vs Commissioner Of Central Excise on 13 November, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
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Reserved On : 15/10/2025
Pronounced On : 13/11/2025
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 2599 of 2010
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
✓
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M/S MEGHDEV ENTERPRISES
Versus
COMMISSIONER OF CENTRAL EXCISE
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Appearance:
MR D K TRIVEDI(5283) for the Appellant(s) No. 1
MR ANKIT SHAH(6371) for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. D.K. Trivedi for the appellant and learned Page 1 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined 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 15.10.2010 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Ahmedabad (For short "the Tribunal") in Appeal No.E/1327 & 1388/2009.
3. The appeal is admitted by this Court vide order dated 23.06.2011 for consideration of the following substantial questions of law:
"(A) Whether on the facts and circumstances of the case, the CESTAT is correct in holding that the services received in respect Page 2 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined 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?
(B) 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?
(C) Whether on the facts and circumstances of the case, the Appellant 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 company was engaged in manufacture and clearance of decorative laminate sheets falling within Chapter 48 of the Central Excise Tariff. The appellant was holding Central Excise Page 3 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined Registration and was paying duty of Central Excise regularly. The appellant is also availing the benefits of credit of Central Excise Duty paid on inputs and capital goods received in their factory as also credit of service tax paid on various input services used by them in or relation to manufacture and clearance of dutiable final product.
5. The appellant had entered into a contract with Paschim Gujarat Vij Co. Ltd.
by virtue of which the appellant was required to install wind mill at a notified place and use the same in generation of electricity. On doing so, the appellant would get the exemption from payment of electricity bill in ratio with the energy wheeled out by them through the said wind mill.
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6. The installation of wind mill was done by M/s. Suzlon Infrastructure Services Ltd. and towards the said installation of wind mill, the appellant was required to pay charges/ consideration to the said M/s. Suzlon Infrastructure Services Ltd. M/s. Suzlon had issued various invoices in favour of the Appellant.
7. The appellant was made aware that Service Tax was paid by said M/s. Suzlon Infrastructure Services Ltd. at applicable rates and following the same, they had mentioned the said amount of Service Tax in the invoice and were asking reimbursement of the same from the appellant.
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8. It is the case of the petitioner that by virtue of Rule-3 Cenvat Credit Rules, 2004, the appellant were eligible to avail credit of said Service Tax paid by M/s.
Suzlon Infrastructure Services Ltd. and accordingly, the appellant had taken credit of the said amount of Service Tax.
9. The Appellant had also written a letter dated 17/12/2007 to the Assistant Commissioner, Central Excise, Surendranagar, vide which they had informed about the said amount of Service Tax credit taken by them and also informed the said authority that they may not utilize the said credit until such time, the same is allowed by the Authority.
10. The appellant thereafter received a Show Cause Notice whereby it was alleged Page 6 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined that since the installation of wind mill was at Kutch and not within the factory premises, the appellant was not eligible to avail the credit of Service Tax and accordingly and therefore, the appellant were called upon to show cause as to why the Cenvat Credit of Rs.3,68,792/- should not be recovered from them under provisions to Rule-14 of Cenvat Credit Rules, 2004 read with the proviso to Section-11A of Central Excise Act, 1944, penalty as per the provisions of Rule-
15(3) of the Cenvat Credit Rules, 2004 read with Section-11AC of Central Excise Act, 1944 should not be imposed on them for the contravention of Rule-4 of Cenvat Credit Rules, 2004; interest as applicable at the material time should not be recovered from them under Rule-14 of Page 7 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined Cenvat Credit Rules, 2004 read with Section-11AB of the Central Excise Act, 1944.
11. On receiving the Show Cause Notice, the appellant filed a detailed reply dated 30.7.2008, wherein they had contended that the appellant has a factory situated at Surendranagar wherein they are manufacturing laminated sheets falling under Chapter-48 fo the Central Excise Tariff, they are registered with the Central Excise Department and are paying duty of Central Excise regularly and in terms of Rule-4 (7) of Cenvat Credit Rules, 2004 they are eligible to avail Cenvat Credit in respect of Input Service on or after the day on which the payment was made towards the value of said Input Services at the Service Tax paid or Page 8 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined payable was indicated in invoice, bill or Challan referred to in Rule-9 of Central Excise Rules, 2002.
12. Subsequently, the appellant was called for personal hearing, which was attended by their Advocate on 16.1.2009, during which the learned Advocate had reiterated the submission made vide the reply.
13. However, the adjudicating authority passed the Order-In-Original dated 23.1.2009 holding that the appellant had availed the services from M/s. Suzlon Infrastructure Services Ltd. for installation of wind mill at Kutch and paid Service Tax for said availment of service, the electricity generated at the said wind mill was being supplied to GEB (Patchim Gujarat Vij Co. Ltd.) and in view Page 9 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined of the same, GEB provided exemption to the appellant on electricity charges at their factory at Surendranagar but the service availed for installation of wind mill had no relation with the manufacture of Final product at Surendranagar directly or indirectly for the availment of Input Service credit and according to the definition of input Service, service availed by the appellant at Kutch and credit of Service Tax paid for such service is not admissible at their unit at Surendranagar as there was no direct or indirect relation between such availment service at Kutch and manufacture of Final product at Surendranagar and therefore, the credit so availed was required to be recovered. Accordingly, the Adjudicating Authority confirmed the demand of Page 10 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined Rs.3,68,792/- and ordered its recovery under the provision of Rule-14 of Cenvat Credit Rules, 2004 read with SECtion-11A of Central Excise Act, 1944 along with interest under SECtion-11AB and imposed a penalty of Rs.2000/- under Rule-15(3) of Cenvat Credit Rules, 2004.
14. Being aggrieved and dissatisfied by the said order, the appellant had preferred an appeal before the learned Commissioner (Appeals), Customs and Central Excise, Rajkot. The Commissioner(Appeals) vide impugned order dated 05.05.2009 set aside the order of the lower authority so far as it is related to imposition of penalty of Rs.2000/- on the Appellant under Rule-15 (3) of Cenvat Credit Rules, 2004 and dismissed the appeal so far as the Page 11 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined admissibility of credit of Service Tax in question was concerned.
15. Being aggrieved and dissatisfied by the same, the Appellant had preferred an appeal before the Tribunal. The Tribunal vide order dated 15.10.2010 had rejected the appeal filed by the Appellant following the Tribunal's decision in the case of Rajhans Metal Pvt. Ltd. v/s.
Commissioner of Central Excise, Rajkot reported at 2007(8) STR 498 (Tri-
Ahmedabad) observing as under:
"Both the appeals are being disposed off by a common order as the issue involved is identical.
2. Both the appellants are engaged in the manufacture of excisable goods and have installed one wind mill for generation of electricity at a long distant place from their factory. The issue under consideration relates to availment of cenvat credit of service tax paid in relation to the services Page 12 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined utilised for wind mill farm project. The same stands denied to the appellants on the ground that wind mill as also the factory are two independent units, one engaged in manufacture of excisable goods and the other for generating electricity. As such the services obtained at the wind mill cannot be held to be input services so as to allow the cenvat credit of service tax.
3. The details of the matter are not being gone into in as much as both sides agree that identical issues stand decided by the Tribunal in the precedent decisions. Reliance in this regard is made to the Tribunal's decision in the case of Rajans Metals Pvt. Ltd. Vs. CCE Rajkot reported in 2007 (8) STR 498 (Tri. Ahmd.). The learned advocates appearing for the appellants fairly agree that the said decision of the Tribunal stands subsequently followed in number of other decisions. Having also Both sides aving also agreed that though a tax appeal filed against the above order stands admitted by the Hon'ble High Court of Gujarat but there is no interim order staying the operation of the said decision.
4. As such by following the above decision, I find no merits in the appellants' appeals. The same are Page 13 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined accordingly rejected. I also note that the Commissioner (Appeals) has fairly held that the appellants are liable to pay interest only in respect of the amount of credit utilised by them. He has also dropped penalty in respect of both the appellants, by following the earlier decision of the Tribunal in the case of Rajans Metals.
5. In view of the foregoing, the credit availed by both the units is rejected."
16. Learned advocate Mr. D.K. Trivedi appearing for the appellant submitted that only ground on which Cenvat Credit is denied by the respondent authorities and as upheld by the Tribunal is that the electricity was being generated in Wind Mills far away from the factory premises and as electricity is not excisable, Cenvat Credit is not available even at the premises of the Wind Mills.
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17. It was submitted that the electricity generated by the Wind Mills was utilised by the appellant in its manufacturing unit through GEB. It was submitted that the agreement with GEB was only for the purpose of utilising the power generated by the Wind Mills for consumption at factory for manufacturing purpose which is connected through GEB Power Grid/High tension supply lines.
18. It was submitted that the appellant was already paying charges for excess use of power from GEB in addition to power generated by the Wind Mills transmitted through GEB power grid. It was therefore, submitted that there is nexus between the power generated through Wind Mills and the goods manufactured as three activities i.e sale, supply and consumption takes place Page 15 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined immediately even though place of generation and manufacturing are different and therefore, the appellant is entitled to avail the credit of service charges incurred in relation to the Wind Mills. In support of his submission, reliance was placed on the following decisions:
1) Commissioner of Central Excise v.
Excel Crop Care Ltd. reported in 2018 (12) STR 436 (Guj.).
2) C.C.E. & Cus., Aurangabad v. Endurance Technology Pvt. Ltd. reported in 2017 (52) S.T.R. 361 (Bom.)
3) Commissioner of C. Ex. & S.T., Chennai v. Ashok Leyland Ltd. reported in 2019(369) E.L.T. 162 (Mad.) Page 16 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined
4) Parry Engg. & Electronics P. Ltd. v.
C.C.E. & S.T., Ahmedabad-I,II,III reported in 2015(40) S.T.R. 243 (Tri.-LB)
5) Endurance Technologies P. Ltd. v.
Commr of C. Ex., Aurangabad reported in 2011 (273) E.L.T. 248 (Tri.-Mumbai)
19. It was submitted that this Court in case of Excel Crop Care Ltd.(supra) after considering the provisions of the Act and the Rules and more particularly, definition of "input service" as defined in Rule 2(l)(i) of the Rules held that mobile service provider, who is liable to pay service tax and recovers the same by adding such service tax in his bill, is the person providing taxable service and is rendering "output service" so as to constitute "input service" in the hands of Page 17 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined respondent assessee. It was therefore, submitted that the service tax paid by the appellant on the installation and erection of the Wind Mill is required to be given credit under the provisions of the Rules.
20. Reliance was also placed on Circular No.97/8/2007-S.T. dated 23.08.2007 more particularly, clause 8.3 thereof in which doubt raised regarding the admissibility of the Cenvat Credit on service tax paid in respect of mobile phones was answered to the effect that in the Rules, no condition has been prescribed with regard to admissibility of credit of service tax only on telephone connection installed in the business premises. It was therefore, submitted that the for the electricity utilised for manufacturing by the appellant provided by GEB against supply Page 18 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined of electricity generated by Wind Mills, the appellant was entitled to the credit of service tax.
21. On the other hand, learned advocate Mr. Anikit Shah for the respondent reiterated the contentions raised before the Tribunal and submitted that there is no connection between the electricity generated at the place of installation of Wind Mills by the appellant and the manufacturing activity taking place at its factory as the electricity is being received through GEB. It was pointed out that the electricity itself is not excisable and therefore, service tax credit is rightly rejected by the Tribunal.
22. Having heard the learned advocates for Page 19 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined the respective parties and having considered the facts of the case, the issue on hand has already been decided by this Court by order of even date in Tax Appeal No.1037 of 2008, wherein it has been held as under:
"18. Having heard the learned advocates for the respective parties and having considered the facts of the case, it would be germane to refer to the relevant provisions of the Act and the Rules.
Finance Act, 1994:
"65(29) - "commissioning and installation agency" means any agency providing service in relation to erection, commissioning or installation."
"(39a) "erection, commissioning or installation" means any service provided by a commissioning and installation agency, in relation to,-
(1) erection, commissioning or installation of plant, machinery or equipment; or Page 20 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined
(ii) installation of-
(a) electrical and electronic devices, including wirings or fittings therefor; or
(b) plumbing, drain laying or other installations for transport of fluids; or
(c) heating, ventilation or air-
conditioning including related pipe work, ductwork and sheet metal work; or
(d) thermal insulation, sound insulation, fire proofing or water proofing; or
(e) lift and escalator, fire escape staircases or travelators; or
(f) such other similar services;"
Cenvat Credit Rules, 2004 :
"Rule 2(l)"input service" means any service, -
(i) used by a provider of taxable service for providing an output service, or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, Page 21 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;"
Rule (4) Conditions for allowing CENVAT credit (1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service."
19. Definition of term "input service" as appearing in Rule 2(l) of the Rules would also include any service used by a provider of taxable services for providing an output service, or used by the manufacturer, whether directly or Page 22 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined indirectly, in relation to the manufacture of final products and clearance of final products from the place of removal.
20. In the facts of the case, the appellant has utilised the electricity supplied by GEB against the electricity generated by Windmills and therefore, service tax paid by the appellant on the installation, erection and services in connection with maintenance of the Wind Mills are exclusively used in relation to manufacturing activity and therefore, the same would be squarely covered under the definition of "input service", as the management, maintenance and repair of Windmills installed by the appellant would fall within "input service" as defined by clause (l) of Rule 2 read with Rule 4 of the Rules which provides that any input or capital goods received in factory or any input services received by the manufacturer of final product would be susceptible to Cenvat Credit.
21. It is pertinent to note that there is no provision in the Rules which stipulates that input services received by the manufacturer must be received by the manufacturer at the factory premises.
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22. This Court in case of Excel Crop Care Ltd. (supra) while considering the question as to the allowability of Cenvat Credit on mobile services after considering Rule 2(l) of the Rules held that the mobile service provider who is liable to pay service tax and recovers the same by adding such service tax in his bill, is the person providing taxable service and is rendering output service so as to constitute input service in the hands of the assessee and therefore, the ground on which the credit was disallowed as the phones were not installed in the factory premises was held to be a ground not germane to the provisions of the Rules.
23. The Hon'ble Bombay High Court in case of Endurance Technology Pvt. Ltd.(supra) on similar issue of allowability of Cenvat Credit on electricity generated from the Windmills has held as under:
"5. On perusal of these Rules, it becomes clear that the management, maintenance and repair of windmills installed by the respondents is input service as defined by clause "I" of Rule 2. Rule 3 and 4 provide that any input or capital goods received in the factory or any input service Page 24 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined received by manufacture of final product would be susceptible to CENVAT credit. Rule does not say that input service received by a manufacturer must be received at the factory premises. The judgments referred to above, also interpret the word "input" service in similar fashion.
In the case of Commissioner of Central Excise, Nagpur v. Ultratech Cement Ltd. [cited supra), the Division Bench of this Court held that the definition of "input service"
is very wide and covers not only services which are directly or indirectly used in or in relation to manufacture of final product but also includes various services used in relation to business of manufacture of final product. The expression "activities" in relation to business is also discussed in this judgment by referring to judgment of Apex Court.
In the case of Deepak Fertilizers & Petrochemicals Corporation Ltd. v. C.C.Ex. Belapur [cited supra) the Division Bench held as under:
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6. In view of this discussion, we have no hesitation to hold that the answer to question No. (1) is in affirmative.
Despite this settled position, learned counsel for the appellant tried to submit that the judgment cited at Sr. No. (2) is being challenged before Supreme Court. This submission does not really help us in deciding the appeals. Both appeals are dismissed."
24. Similarly, Hon'ble Madras High Court in case of Ashok Leyland Ltd.(supra) after considering the decision of Bombay High Court in Page 28 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined case of Endurance Technology Pvt. Ltd.(supra) held as under:
"17. Thus, we are to consider as to whether there has been any nexus between the energy generated and the manufacturing activity of the assessee. This very issue was considered in Endurance Technology Pvt. Ltd. (supra).
In fact, we find two substantial questions of law framed for consideration in Endurance Technology Pvt. Ltd. (supra), which are more or less identical to that of the questions of law framed in these appeals. The first question framed for consideration was whether the assessee is entitled to avail Cenvat credit on management, maintenance or repair services provided on services to windmills installed and situated away from the factory premises. The second question was whether electricity generated on two different places far away could be said to have been used for manufacture of the final product of the assessee in its factory at Aurangabad.
18. So far as the second substantial question of law is Page 29 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined concerned, it was answered in the affirmative in the light of the stand taken that admittedly, such electricity generated at those two different locations was adjusted to the electricity used in the factory at Aurangabad and this adjustment was admitted by the Revenue and accordingly, the second question was answered in favour of the assessee. In the case on hand also, in the show cause notice, the adjudicating authority does not dispute the fact that equivalent quantity, that is, the quantity generated is the same as the quantity drawn by the assessees from the TNEB grid.
On the first question of law, with regard to the availment of cenvat credit on input services, the Hon'ble Supreme Court referred to the decisions of the High Court of Bombay in the case of Commissioner of Central Excise, Nagpur v. Ultratech Cement, 2010 (20) S.T.R. 589 (Bom.); Commissioner of Central Excise, Nagpur v. Ultratech Cement Ltd., 2010 (260) E.L.Τ. 369 (Bom.); and Deepak Fertilizers & Petrochemicals Corporation Ltd. v. C.C. Ex. Belapur, 2013 Page 30 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined (32) S.T.R. 532 (Bom.). The Hon'ble Supreme Court, after taking note of the relevant rules, held that it becomes clear that management, maintenance and repair of windmills installed by the respondents is input service as defined in Clause I of Rule
2. It was held that Rules 3 and 4 provide that any input or capital goods received in the factory or any input service received for manufacture of final product would be susceptible to Cenvat credit. Further, it was held that Rule does not say that input service received by a manufacturer must be received at the factory premises and the decisions relied on also interpret the word "input service" in similar fashion.
19. Further, by referring to the decision in Commissioner of Central Excise, Nagpur v. Ultratech Cement, 2010 (20) S.T.R. 589 (Bom.) (supra), it was held that the definition of "input service" is very wide and covers not only services which are directly or indirectly used in or in relation to manufacture of final product, but also includes various services used Page 31 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined in relation to business of manufacture of final product. Further, the expression "activities" in relation to business was also discussed in the said decision following the decisions of the Apex Court.
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25. As already pointed out, there is no dispute that the electricity generated by the windmills are exclusively used in the manufacturing unit for final products, there is no nexus between the process of electricity generated and manufacture of final products and there is no necessity for the windmills to be situated in the place of manufacture. Further, as already noticed, the definition of "input service" is wider than the definition of "input".
Furthermore, if one takes a look at the Rules, more particularly Rule 2(k), as it stood prior to 1-4-2011, which defines "input", the following has been specifically inserted.
"within the factory of
production".
However, these words are
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NEUTRAL CITATION
C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025
undefined
physically missing in Rule 2(1), which defines "input service" and it would mean any service used by a provider of taxable service for providing an output service or used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal. Though the definition of "input service" has to be widely construed, and in terms of Rule 3, which allows the manufacturer of final products to take the credit of service tax inputs or capital goods received in the factory of manufacture of final products, insofar as any input service is concerned, the only stipulation is that it should be received by the manufacturer of final products. Therefore, this would be the correct manner of interpreting Rule 2(1) of the Rules.
26. In the light of the above, we are of the considered view that the decision in the case of Ellora Times Ltd. (supra) does not lay down the correct legal position and we agree with the decision of the High Page 33 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined Court of Bombay in Endurance Technology Pvt. Ltd. (supra), which has been followed by the Larger Bench of the Tribunal in Parry Engg. & Electronics P. Ltd."
25. In view of above settled legal position and in absence of words "within the factory of production"
in Rule 2(l) which defines "input service" which would mean that any service used by a provider of taxable service for providing an output service or used by the manufacturer whether directly or indirectly, or in relation to the manufacture of final product and clearance of final product from the place of removal, the definition of 'input service' has to be widely construed and therefore, the appellant would be entitled to the credit of service tax paid on inputs or capital goods or services received for Windmills for goods manufactured in the factory because only stipulation is that the input service should be received by the manufacturer of products.
26. Therefore, in view of decision of this Court in case of Excel Crop Care Ltd. (supra) we are in respectful agreement with the decision of Hon'ble Bombay High Court in case of Endurance Technologies P. Ltd. (supra) as Page 34 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025 NEUTRAL CITATION C/TAXAP/2599/2010 CAV JUDGMENT DATED: 13/11/2025 undefined well as decision of Hon'ble Madras High Court in case of Ashok Leyland Ltd. (supra).
27. In view of foregoing reasons, we answer the questions of law in favour of the appellant assessee and against the Revenue. Appeal is accordingly allowed."
23. Adopting the same reasoning, we answer the questions of law in favour of the appellant assessee and against the Revenue. Appeal is accordingly allowed.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) RAGHUNATH R NAIR Page 35 of 35 Uploaded by RAGHUNATH R NAIR(HC00196) on Mon Nov 17 2025 Downloaded on : Mon Nov 17 22:12:40 IST 2025