2011 (5) TMI 802 - AT - Service Tax

Whether the appellants are entitled for CENVAT credit availed on service tax paid on transportation and clearance of waste arising in their factory during the course of manufacture of final product or not Held that - in the case of Ultratech Cement Ltd. (2010 - TMI - 78203 - BOMBAY HIGH COURT) that any service availed by the assessee during the course of their business of manufacturing and the cost of said service has taken part of the cost of production, the assessee is entitled to avail CENVAT credit on such services, transportation and clearance of waste is an activity of the appellant s manufacturing business. Therefore, the appellants are entitled to avail the CENVAT credit on service tax paid on transportation and clearance of waste generated during the course of manufacturing, appeal is allowed

Summary

Issues:
Denial of CENVAT credit on service tax paid for transportation and clearance of waste generated during manufacturing.

Analysis:
The appellant, engaged in bulk drug manufacturing, appealed against the denial of CENVAT credit on service tax paid for waste transportation. The waste chemicals generated during manufacturing were transported to a treatment plant, with the appellant availing transportation services and paying service tax. Both lower authorities denied the CENVAT credit, leading to the appeal. The advocate for the appellant argued that since waste transportation was part of their manufacturing business, they were entitled to the credit, citing a Bombay High Court decision. The respondent contended that waste clearance was a post-manufacturing activity, thus not eligible for CENVAT credit.

Upon hearing both sides, the judge analyzed whether the appellant was entitled to CENVAT credit for service tax paid on waste transportation and clearance during manufacturing. Referring to the Bombay High Court decision, it was established that if a service is part of the manufacturing business and its cost contributes to production costs, CENVAT credit is permissible. In this case, waste transportation and clearance were integral to the manufacturing process, making the appellant eligible for the credit. Consequently, the judge set aside the impugned order and allowed the appeal with any consequential relief.