2017 (6) TMI 365 - AT - Central Excise

Input tax credit - input services - services rendered by the Tamil Nadu Waste Management Ltd. (TWML) for collection and transportation of the waste to land filing facility at Gummudipoondi - Held that - these services availed by appellant are very much essential to run manufacturing process and hence are very much used by them in relation to the manufacture of their final products. Such services had necessarily to be availed as per the requirement of Pollution Control Board - the said input service availed is also not barred by exclusion provisions of said Rule 2 (l) - credit allowed - appeal allowed - decided in favor of assessee.

Summary

Issues Involved:
Common issue arising from three impugned orders-in-appeal regarding the recovery of service tax input credit allegedly wrongly availed for services rendered by Tamil Nadu Waste Management Ltd. for waste collection and transportation.

Analysis:
The appeals involved a common issue stemming from three different impugned orders-in-appeal passed by the Commissioner (Appeals), LTU, Chennai, concerning the recovery of service tax input credit allegedly wrongly availed by the appellant for services provided by Tamil Nadu Waste Management Ltd. for waste collection and transportation. The department issued show cause notices proposing the recovery of service tax input credit for various periods. The original authority confirmed these proposals, leading to the imposition of penalties and interest. On appeal, the Commissioner (Appeals) upheld the original authority's orders entirely, prompting the appellants to approach the forum for redress.

During the hearing, the appellant's advocate argued that the services provided by Tamil Nadu Waste Management Ltd. were engaged as per the Tamil Nadu Pollution Control Board's directions for the removal and disposal of hazardous waste. He highlighted specific details from a letter issued by the Pollution Control Board, emphasizing the necessity of engaging the services of the waste management company for safe disposal. The advocate referenced a previous Tribunal order allowing input service credit for pollution control activities, indicating the relevance of the services in question.

Conversely, the respondent's representative contended that the manner of disposal did not fall within the scope of eligible input services as per the Cenvat Credit Rules. He argued that the activities in question were not listed in the relevant rule's provisions and differed from the case law cited by the appellant. The respondent emphasized that the disposal activities were not conducted within the factory premises, raising doubts about the eligibility of the input service credit availed by the appellant.

Upon considering the arguments from both sides and examining the facts of the case, the Tribunal delved into the definition of "input service" as per the Cenvat Credit Rules, 2004. The Tribunal highlighted the inclusive nature of the definition, emphasizing that services not explicitly listed could still qualify as eligible input services if they met the rule's conditions. In this context, the Tribunal analyzed the appellant's compliance with pollution control norms mandated by the Pollution Control Board, underscoring the critical nature of the waste disposal services for the manufacturing process. The Tribunal concluded that the services availed by the appellant were essential for compliance with regulatory requirements and were directly related to the manufacturing of final products, thus qualifying as eligible input services under the rule. Consequently, all appeals were allowed, granting the appellants consequential benefits as per the law.

In conclusion, the Tribunal's detailed analysis and interpretation of the Cenvat Credit Rules elucidated the eligibility of the input services availed by the appellant, emphasizing the importance of regulatory compliance and the direct relevance of the services to the manufacturing process.