A Wind Mill power generating unit which is situated away from factory say Pollachi, Coimbatore district.
The factory is situated in Tiruchy, The power produced by wind mill is utilised within the factory in Tiruchy. Now a generator is installed in the Wind mill unit . Is the factory at Tiruchy eligible to take credit on Excise Duty paid on generator and Service Tax on Installation charges paid on such generator?
wind mill is seperate identity and it can not be treated as factory, so the cenvat credit is not applicable in DG set or the service tax on installation.
Dear Mr. Sharma
INPUTS U/R. 2(k) (vi)
IP includes goods used for generation of electricity or steam used within the factory of FPs or any other purpose.
The generation of power may take place anywhere. But the use shall be inside the factory or premises. It does not matter how it is used.
Here the same is used for generation of electricity at the wind mill plant and in turn such electricity produced by windmill is used in the factory premises .
So, it can be said the power generated by the windmill is an input.
So, this makes me more confused.
Dear Vinay,
1. Input credit of excise duty paid on generator:
If you interpret the definition of input to include goods used for 'generation of electricity outside the factory of production', Rule 4 of the CENVAT Credit Rules, 2004 which provides that CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer conflicts your interpretation.
So as goods are not brought inside the factory, CENVAT credit will not be available.
2. Input credit of service tax on installation of generator:
The definition of input service in Rule 2(l) makes it clear that such installation is input service. If the condition laid down in Rule 4(7) is also satisfied, availing CENVAT credit cannot be denied.
Regards,
Pradeep Kamath.
CAclubindia
