Custom, Excise & Service Tax Tribunal
Ashok Leyland Limited vs Chennai-I on 2 January, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. III
Excise Appeal Nos. 41388-41398 of 2015
(Arising out of Order-in-original No.07 to 17/2015 dated 28.02.2015
passed by Commissioner of Central Excise, Chennai-I Commissionerate,
26/1, Mahatma Gandhi Road, Nungambakkam, Chennai-600 034)
M/s. Ashok Leyland Limited .... Appellant
(Previously known as Hinduja Foundries Ltd.)
No.1A, Kathivakkam High Road,
Ennore,
Chennai 600 057.
VERSUS
The Commissioner of GST &
Central Excise ... Respondent
Chennai Outer Commissionerate, Newry Towers, No.2054, I Block, II Avenue, 12th Main Road, Anna Nagar Chennai 600 040.
APPEARANCE :
Shri M. Kannan, Advocate for the Appellant Ms. Anandalakshmi Ganeshram, Authorized Representative for the Respondent CORAM :
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) FINAL ORDER Nos.40009-40019/2025 DATE OF HEARING : 23.10.2024 DATE OF DECISION :02.01.2025 2 Excise Appeal Nos. 41388-41398 of 2015 Per: Shri P. Dinesha The Assessee-Appellant is assailing the common Orders-in-Original No.7 to 17/2015 dated 28.02.2015 passed by the Commissioner of Central Excise, Chennai-I Commissionerate.
2. Brief facts which are undisputed are that the appellant is a manufacturer of cast Articles of Iron and Aluminium of a kind principally used in Motor Vehicles falling under Chapter 73 and 76 of First Schedule to CETA, 1985. It appears that the appellant had availed input service credit of service tax paid on lease rentals and operation and maintenance charges of wind mills located in Tirunelveli District; the electricity generated therefrom was transferred to the power grid of the Tamil Nadu Electricity Board (TNEB) from where equal quantity of electricity was drawn to the appellant's factory.
3. The Revenue appears to have noticed from the agreement dated 18.10.2010 between M/s.Hindujua Foundries Ltd. (the appellant herein, who is now named as Ashok Leyland Ltd.) and M/s.Ashok Leyland Wind Energy Limited (ALWEL, for short) for the purpose of wheeling of power from the windmills by M/s.ALWEL which was sold to the appellant on certain terms and conditions. In a nutshell, the view of the Revenue was that (i) the power generated from the windmills by M/s.ALWEL was sold to the appellant;
(ii) the invoices raised for the amount worked out on the basis of number of units generated / supplied by the windmills and sold to appellant.
3Excise Appeal Nos. 41388-41398 of 2015 3.1 The above prompted issuance of 11 Show Cause Notices wherein it was proposed inter alia to recover input service credit availed during the period October 2009 to June 2013. It appears that the appellant submitted detailed replies to the SCNs which were considered during the adjudication and vide the impugned Orders-in-Original (supra) the Original Authority confirmed the proposals made in the SCNs and thereby ordered recovery of wrongly availed service tax credit, along with appropriate interest and imposed penalties. It is against this order that the present appeals have been filed before this forum.
4. Heard Shri M. Kannan, Ld. Advocate for the Appellant and Smt. Anandalakshmi Ganeshram, Ld. Assistant Commissioner for the Respondent, we have carefully perused the documents placed on record and we have also considered the various judicial pronouncements relied upon during the course of arguments. The only issue that arises for our consideration is "Whether the appellant was justified in availing input service credit of the service tax paid on lease rentals and operation and maintenance charges of windmills ?"
5. It is inter alia the case of the appellant that they had availed input service credit of the service tax paid on lease rentals and operation and maintenance charges of windmills; the electricity generated from such windmills was transferred to the power grid of TNEB from where equal quantity of electricity was drawn to the appellant's factory. It is further contended that the authority below was not justified in disallowing the input service credit on the ground that the 4 Excise Appeal Nos. 41388-41398 of 2015 input services were received outside the factory premises and that there is no dispute that the electricity generated by the windmills were, in fact, used in the manufacture of final products and payment of service tax for lease rentals and operation and maintenance charges of windmills was not in dispute and therefore, the input service credit would not be denied. Further, Ld. Advocate relies on the following judicial pronouncements :
(i) CCE & Cus., Aurangabad Vs Endurance Technology Pvt. Ltd. - 2017 (52) STR 361 (Bom.)
(ii) Parry Engg. & Electronics Pvt. Ltd. Vs CCE & ST Ahmedabad - 2015 (40) STR 243 (Tri.-LB)
(iii) Tribunal Final Order No.40281-40326/2015 dated 25.02.2015 which was upheld by Hon'ble High Court as reported in CCE & ST Chennai Vs M/s.Ashok Leyland Ltd. - 2019 (369) ELT 162 (Mad.)
6. Without prejudice to the above, Ld. Advocate would also rely on the decision of Nizam Sugar Factory Vs CCE, A.P. - 2006 (197) ELT 465 (SC), wherein the Hon'ble Supreme Court has held that there is no scope for the Revenue to allege suppression and thereby invoke the extended period of limitation. He would also place reliance on the decision of Hon'ble Apex Court decision in Nirlon Ltd. Vs CCE Mumbai - 2015 (320) ELT 22 (SC) wherein it has been held that when the entire exercise was revenue- neutral, the extended period was not invocable.
5Excise Appeal Nos. 41388-41398 of 2015
7. Per contra, Ld. Assistant Commissioner relied on the findings in the impugned order. She would also specifically take us through the Agreement which has been analyzed in the impugned order at paragraph 8.5 to contend that the scope and ambit of the Agreement was only selling of electricity and there is no mention of leasing of windmills in the said Agreement. Hence she would request for dismissing the appeals.
8. A perusal of the impugned order reveals that the Commissioner had observed from the above Agreement between the Appellant and M/s.ALWEL, the inputs which were used for operation and maintenance of windmills was used by M/s.ALWEL which is evident from the fact that the contract specified that the cost of operation and maintenance was to be borne by M/s.ALWEL. M/s.ALWEL was also responsible for the generation of electricity and they were in fact getting the windmills maintained and hence the appellant was in no way responsible for maintenance of windmills nor had they given any contract for doing so to M/s.ALWEL for operation and maintenance of windmills in question. A perusal of the above Agreement between the parties clearly indicates that the understanding was for supply of electricity and nowhere in the contract is it mentioned that M/s.ALWEL would be operating and maintaining the windmills on behalf of the Appellant.
9. Clause III Operative Mechanism of the above Agreement which is placed in the paper book (page 25 of the paper book) reveals the scope of work as under :
6Excise Appeal Nos. 41388-41398 of 2015 "a. the entire work of operation and maintenance of wind mills in good working condition and repairs shall be the sole responsibility of the ALWEL who shall bear the entire cost of operation and maintenance charges. This agreement will be in force for a minimum period 10 years from the date of signing of the agreement and shall be renewed further on mutual consent.
... ..
f. HFL hereby acknowledges, confirms and declares that ALWEL is the absolute owner of the said equipment and every part thereof during the entire period of the agreement and HFL has no proprietary right, title or interest therein and further ALWEL alone is entitled to claim depreciation and any other allowance or benefit available under the Income Tax Act."
10. The Appellant though contended that the service tax was paid on operation and maintenance of the windmills, it is claimed to have been taken on lease by them from M/s.ALWEL, however, from the clauses of the Agreement, the leasing of the windmills is not featuring in the said Agreement and hence the claim of the Appellant clearly lacks any merit.
11. The finding of the Original Authority however, has not at all been answered by the Appellant but their contentions are only tangential; the Appellant restricts its argument on the observation as to the allegation of windmills being outside the factory and the reliance of various case law is also on the same lines. The fact however remains that the doubt in the minds of the Adjudicating Authority remains unanswered, which according to us, goes into the root of the issue, that is to say, there is no mention about the lease of the windmills in the Agreement between the parties, the agreement is only for supply of electricity and M/s.ALWEL was not at 7 Excise Appeal Nos. 41388-41398 of 2015 all operating and maintaining the windmills for the Appellant.
12. From the above discussions, it is clear to us that the Commissioner is justified in invoking the extended period of limitation. In view of the above, we do not find any merit in the appeals and we dismiss the same.
(Order pronounced in the open court on 02.01.2025) sd/- sd/-
(VASA SESHAGIRI RAO) (P. DINESHA) Member (Technical) Member (Judicial) gs