2015 (10) TMI 1558 - AT - Central Excise

Denial of CENVAT Credit - appellant availed cenvat credit on the cement used for treating the effluent jarosite before dumping it in the land fill - Held that - In Indian Farmers Fertilisers Coop. Ltd. (1996 (7) TMI 141 - SUPREME COURT OF INDIA), the issue came up before the Hon ble Apex Court for directions to agricultural plant wherein the Apex Court has held that the apparatus used for treatment of effluent in a plant manufacturing a particular end-product is a part and parcel of the manufacturing process of end-product - appellant has used cement for stabilization of hazardous waste jarosite as toxic effluent at secured land fill which is part and parcel of their manufacturing activity. In these terms, we hold that appellant has correctly taken cenvat credit and consequently, they are not required to reverse the same. With these observations, we set aside the impugned order - Decided in favour of assessee.

Summary

Issues involved:
Appeal against impugned orders denying cenvat credit, demand of duty, interest, and penalty - Appellant engaged in manufacturing lead, zinc, and sulphuric acid - Treatment of toxic effluent 'Jarosite' with cement before disposal - Revenue's contention on exclusive use of cement for effluent treatment - Appellant's reliance on settled issue by Hon'ble Apex Court - Interpretation of 'in relation to the manufacture of final product' - Applicability of cenvat credit rules on cement used for effluent treatment - Legal precedence on treatment of effluents as integral part of manufacturing process.

Detailed Analysis:
The appellant filed appeals against orders denying cenvat credit, demanding duty, interest, and imposing penalties due to the treatment of toxic effluent 'Jarosite' with cement before disposal. The Revenue argued that since cement was exclusively used for effluent treatment and not in connection with the final product manufacturing, cenvat credit should be denied. The appellant contended that the issue had been settled by the Hon'ble Apex Court in a previous case involving a similar scenario.

The Hon'ble Apex Court's judgment in the Indian Farmers Fertilisers Coop. Ltd. case highlighted that apparatus used for effluent treatment in a plant manufacturing a specific end-product is an integral part of the manufacturing process. The Court emphasized that treatment of effluents is crucial for pollution control and environmental protection, making it a necessary component of the manufacturing process. The Madras High Court also affirmed this view in a separate case involving the treatment of Hydrochloric Acid for effluent, citing legal precedents supporting the eligibility of such treatments for credit.

Furthermore, a Tribunal case involving chemical manufacturers reiterated the necessity of installing effluent treatment plants for manufacturing processes, making treatment of harmful effluents an essential part of production. In the present case, the appellant used cement for stabilizing hazardous waste 'Jarosite' as toxic effluent before disposal, which was deemed an integral part of their manufacturing activity. Consequently, the Tribunal held that the appellant rightfully availed cenvat credit on cement and was not required to reverse the same, setting aside the impugned order and allowing the appeals with any consequential relief.

In conclusion, the judgment underscored the significance of effluent treatment in manufacturing processes, establishing that such treatments are integral to the production of final goods and thus eligible for cenvat credit. The legal precedents cited emphasized the holistic approach to considering processes related to manufacturing and the environmental obligations that industries must fulfill in their operations.