2023 (6) TMI 1323 - AT - Central Excise

CENVAT Credit - services received in relation to effluent treatment of the industrial waste - denial of credit on the ground that the effluent treatment activity is post manufacture and the same is not used in or in relation to manufacture of final product accordingly - HELD THAT - Even though the effluent treatment is not directly connected with the manufacture of final product of the appellant but as per the pollution control act the appellant is bound under the law to carry out the effluent treatment of the Industrial waste generated during the course of manufacture of their final product. As per the provision of Pollution Control Act, if the effluent generated in the manufacture is not treated the appellant shall not be liable to run their factory. In this undisputed position, the effluent treatment activity is necessary to carry out the uninterrupted production of the final product in the appellant s factory therefore, it can be conveniently draw the conclusion that the effluent treatment activity is a vital part of overall manufacturing of the final product if this be so then the input services used for effluent treatment are admissible input service. This issue is no longer res-integra as in the various judgments the services related to effluent treatment has been held as admissible input service and cenvat credit was allowed - In case of COMMISSIONER, CENTRAL EXCISE SERVICE TAX, SURAT-II VERSUS MI/S KANORIA CHEMICALS INDUSTRES LTD. 2015 (7) TMI 970 - CESTAT AHMEDABAD this tribunal dealt with the similar fact held that treatment of effluent from a factory has to be considered as essential and integral part of the process of manufacture. In case of M/S. WIPRO ENTERPRISES (P) LTD., (FORMERLY M/S. WIPRO LTD. ) VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, 2018 (12) TMI 1167 - CESTAT CHENNAI this tribunal s Chennai Bench on the issue of credit on water treatment held that demand raised on Water Treatment Service and Garden Maintenance Service for the period January 2015 to December 2015 is set aside Thus, it can be seen that the issue is no longer res-integra as the services availed in respect of effluent treatment plant for treatment of industrial waste is in relation to the overall manufacturing activity of the appellant s final product in the appellant s factory therefore, the said services are input service hence, the credit is admissible. Appeal allowed.

Summary

Issues Involved:
1. Admissibility of CENVAT credit on services related to effluent treatment.
2. Whether effluent treatment services are considered as input services in relation to the manufacture of final products.

Summary:

Issue 1: Admissibility of CENVAT credit on services related to effluent treatment:
The appellant, engaged in manufacturing pesticides and insecticides, obtained necessary permissions from the Gujarat Pollution Control Board for effluent treatment to comply with environmental regulations. The appellant availed CENVAT credit for services related to effluent treatment. The department denied this credit, arguing that effluent treatment is a post-manufacture activity and not related to the manufacture of the final product.

Issue 2: Whether effluent treatment services are considered as input services in relation to the manufacture of final products:
The appellant contended that effluent treatment is essential for uninterrupted production, as non-compliance would result in the cancellation of manufacturing permissions. The appellant relied on various judgments supporting the claim that effluent treatment is integral to the manufacturing process.

The Tribunal considered submissions from both sides and reviewed the records. It concluded that despite effluent treatment being a post-manufacture activity, it is mandated by law for continuous manufacturing operations. Therefore, effluent treatment services are a vital part of the overall manufacturing process, making them admissible as input services for CENVAT credit. This conclusion aligns with previous judgments, including those from the Supreme Court and various CESTAT benches, which have consistently held that services related to effluent treatment are essential and integral to the manufacturing process.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeals with consequential relief, affirming that services availed for effluent treatment are admissible input services for CENVAT credit. The decision was pronounced in the open court on 28.06.2023.