The appellant manufactured stranded wire in their factories and received permission from M.P. State Electricity Board to generate electricity from windmills — Availed services of erection, installation and commissioning, repair, maintenance, insurance and took CENVAT credit — Department denied CENVAT credit as windmills were located far away from the factory and the power generated by the windmills was not directly received in the factory of the appellant — Held, appellant was eligible to CENVA<

The appellant manufactured stranded wire in their factories and received permission from M.P. State Electricity Board to generate electricity from windmills — Availed services of erection, installation and commissioning, repair, maintenance, insurance and took CENVAT credit — Department denied CENVAT credit as windmills were located far away from the factory and the power generated by the windmills was not directly received in the factory of the appellant — Held, appellant was eligible to CENvAT credit in respect of abovementioned services — it may not be always possible to locate windmills in the vicinity of factory.

The appellant manufactured stranded wire in their factory and received electricity from their wind-mills at Dewas through wheeling arrangement in terms of their agreement with the M.P. State Electricity Board. The appellant availed the services of erection, installation and commissioning, repair, maintenance and also insurance and took CENVAT credit of service tax paid on these services. The Department was of the view that since windmills were located far away from the factory and the power generated by the windmills was not directly received in the factory, the appellant was not eligible to CENVAT credit.

Held:

In case of wind-power generator, it may not be possible to locate it in the vicinity of factory as wind-power generators have to be located at places where wind with sufficient speed is available throughout the year. The appellant’s factories were situated far away from the windmills and they had obtained permission from M.P. State Electricity Board and in the permission, wind mills were mentioned as for captive use by the appellant. Therefore it was held that windmills were to be treated as captive plant and the service of erection, installation and commissioning, repair and maintenance and also insurance used in respect of the same are eligible for CENVAT credit. Services received had clear nexus with the business of manufacture since electricity generated by the windmills was used for running appellant’s factories.