2014 (8) TMI 401 - AT - Central Excise

Availability of Cenvat credit - service of grass shifting / cutting work and water removing outside the factory - Held that - maintenance of garden is an essential requirement under the Pollution laws. Similarly, as the appellants are engaged in the manufacture of soaps and soap noodles, which require use of water and accordingly removal of collected water from the drainage system etc. is a requisite condition for the manufacture of their final product. Demand is duly hit by bar of limitation. Admittedly, the appellant was availing the credit by reflecting the same in their statutory records. In fact the demand was raised on audit objection, which found the above fact from the records maintained by the appellant. As such, there can be no question of any suppression on the part of the appellant, in which case, the demand raised beyond the normal period of limitation would be hit by the bar of limitation - Following decision in the case of Brakes India Ltd. vs. CCE Mysore 2010 (1) TMI 301 - CESTAT, BANGALORE ; ISMT Ltd. vs. CCE 2009 (12) TMI 124 - CESTAT, MUMBAI ; and Semco Electrical Pvt. Ltd. vs. CCE 2009 (12) TMI 143 - CESTAT, MUMBAI - Decided in favour of assessee.

Summary

Issues:
Availability of Cenvat credit on service tax paid for grass shifting and water removal outside the factory during 2007-2009.

Analysis:
The disputed issue in the appeal pertains to the availability of Cenvat credit for service tax on grass shifting and water removal services outside the factory. The appellants were denied credit amounting to Rs. 1,18,076 along with interest and penalties. The appellant, engaged in manufacturing soap products, argued that services like cleaning, water removal, and maintenance of garden were essential for plant operation and compliance with environmental laws. They cited previous Tribunal decisions supporting the necessity of such services for pollution control and smooth plant functioning.

The appellant's contention was supported by previous Tribunal decisions, emphasizing the importance of maintaining gardens for pollution control and the necessity of water-related services for soap manufacturing. Additionally, the demand for denying Cenvat credit was found to be unsustainable on both substantive and procedural grounds. The demand was raised based on an audit objection, despite the appellant reflecting the credit in their records. As there was no suppression of facts by the appellant, the demand was considered time-barred under the statutory limitation period.

In conclusion, the judgment set aside the impugned order and allowed the appeal in favor of the appellant, providing consequential relief. The decision highlighted the essential nature of the disputed services for plant operation and environmental compliance, ultimately supporting the appellant's claim for Cenvat credit on the services in question.