INDIA CEMENTS LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE appellants are manufacturers of cement. They have been denied CENVAT credit of the service tax paid on (i) insurance paid towards fire policy for the colony building of factory; (ii) security charges, maintenance and repair charges paid towards windmill located away from the factory and (iii) telephones installed outside the factory premises and cell phones used by the factory employees, for the period August, 2005 to March, 2006 and accordingly an amount of Rs. 3,16,127/ - has been demanded by the lower authorities. After examining the records and hearing both sides, I have not found prima facie case for the appellants. The amount of service tax credit denied in respect of the first item is around Rs. 2,500/ - and that in respect of the third item is around Rs. 6,250/ -. The rest of the credit relates to the second item, amounting to Rs. 3,07,373/ - which is the major part of the demand. Credit of service tax paid to this extent on security charges, maintenance and repair charges in respect of windmills located at Palladam away from the cement factory has been denied to the appellants on the ground that there is no evidence of the electricity generated by the windmills having been used in the cement factory. The electricity generated by the windmills was supplied to the Tamilnadu Electricity Board (TNEB) and the energy supplied by them was consumed by the appellants in the manufacture of cement. It appears from the records that TNEB charged a lower rate than normal from the appellants after taking into account the cost of electricity supplied by the appellants from their windmills to the Board. It is the case of the appellants that there was clear nexus between the windmill - generated -electricity and the final product manufactured by them. It is, therefore, argued that the services of security, maintenance and repairs of windmills qualify to be 'input services' and therefore credit of the tax paid thereon should be allowed as 'input service' tax credit.

(2.) AFTER a perusal of the definition of 'input' under Rule 2(k) and that of 'input service' under Rule 2(1) of the CENVAT Credit Rules, 2004, it appears to me that the electricity generated by the windmills situate away from the cement factory did not fit in the definition of 'input' and consequently any services received in respect of the windmills would not qualify to be 'input -service'. It is also seen that no nexus has been established between the colony building situated outside the cement factory and the appellant's final product, nor between the telephone services and the final product. In the circumstances, the appellants are directed to pre -deposit an amount of Rs. 1,00,000/ -(Rupees one lakh only) for the purpose of Section 35F of the Central Excise Act. This amount shall be deposited within four weeks. Report compliance on 7th September, 2007.