Case Details: Rajshanti Metals Pvt. Ltd. vs. Commissioner of Central Excise (2025) 37 Centax 114 (Guj.)
Judiciary and Counsel Details
- Bhargav D. Karia & Pranav Trivedi, JJ.
- Shri Dhaval Shah, for the Appellant.
- Shri Ankit Shah, for the Respondent.
Facts of the Case
The assessee, a manufacturer of excisable goods, availed Cenvat credit of Service Tax paid on services received for installation and commissioning of a windmill situated about one hundred kilometres away from the manufacturing unit and on upfront fees paid to obtain a bank loan for purchase of the windmill. The jurisdictional authorities denied such credit on the ground that there was no nexus between the service provider and the manufacture of excisable goods, contending that the services were not relatable to the manufacturing activity. The assessee submitted that the services in question were received by it as a manufacturer and that the definition of ‘input service’ under Rule 2(l) read with Rule 4 of the Cenvat Credit Rules, 2004, required a wide construction, with the only stipulation being receipt of the service by the manufacturer. Reliance was placed on judicial precedent holding that services used for setting up and operating windmills for captive power generation were eligible input services. The matter was accordingly placed before the Gujarat High Court.
High Court Held
The Gujarat High Court held that the expression ‘input service’ under Rule 2(l) of the Cenvat Credit Rules, 2004, was required to be construed widely. The Court held that the only stipulation under the definition was that the input service should be received by the manufacturer of the products. Relying upon its earlier decision in Rajhans Metals Pvt. Ltd. [(2025) 37 Centax 127 (Guj.)], the Court held that Service Tax paid on services received for installation and commissioning of the windmill and on upfront fees paid for obtaining a bank loan to purchase the windmill was eligible for Cenvat credit. Applying the same reasoning, it was held that denial of Cenvat credit was not sustainable, and the appeal was allowed in favour of the assessee.
List of Cases Reviewed
- Rajshanti Metals Pvt. Ltd. v. Commissioner — 2015 (39) S.T.R. 875 (Tribunal) — Reversed [Paras 2, 8]
List of Cases Cited
- Commissioner v. Ashok Leyland Ltd. — 2019 (369) E.L.T. 162 (Mad.) — Referred [Para 11]
- Commissioner v. Endurance Technology Pvt. Ltd. — 2017 (52) S.T.R. 361 (Bom.) — Referred [Para 11]
- Commissioner v. Excel Crop Care Ltd. — 2008 (12) S.T.R. 436 (Guj.) — Referred [Paras 11, 12]
- Endurance Technologies Pvt. Ltd. v. Commissioner — 2011 (273) E.L.T. 248 (Tribunal) = 2012 (27) S.T.R. 320 (Tribunal) — Referred [Para 11]
- Parry Engineering & Electronics Pvt. Ltd. v. Commissioner — 2015 (40) S.T.R. 243 (Tribunal-LB) — Referred [Para 11]
- Rajhans Metals Pvt. Ltd. v. Commissioner — (2025) 37 Centax 127 (Guj.) — Applied [Paras 15, 16]
