2017 (8) TMI 354 - AT - Central Excise

Cenvat credit - input services - Clean Development Mechanism Service in relation to Carbon Credit Management Services - Held that - the matter is covered by the Tribunal s decision in the case of Heidelberg Cement India Ltd. V/s Commissioner of C. EX., Bangalore-I 2016 (9) TMI 677 - CESTAT BANGALORE , where it was held that the service tax paid for providing Consultancy Services in relation to greenhouse gas emission reduction and carbon credit management service as per guidelines under the Koyoto Protocol falls under the definition of input service and the appellants are entitled to Cenvat credit and the impugned order denying the Cenvat credit on the said services on account of lack of nexus is wrong and not sustainable in law - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Appeal against denial of input service credit on 'Consultancy and Certification Services' used for modernization of power plant and reducing Green House Gases emissions as per Kyoto Protocol.

Analysis:
1. The appellant, M/s Hindustan Zinc, appealed against the denial of input service credit on 'Consultancy and Certification Services' used for modernizing their power plant and reducing Green House Gases emissions to comply with environmental norms and the Kyoto Protocol targets.

2. The appellant argued that the services were utilized to reduce toxic gas emissions, aligning with the Clean Development Mechanism (CDM) under the United Nations Framework Conventions on Climate Change and the Kyoto Protocol.

3. The Tribunal analyzed the definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004, emphasizing the 'means' and 'inclusive' parts of the definition. It cited precedents to clarify that any service directly or indirectly used in or in relation to the manufacture of final products qualifies as an input service.

4. Referring to previous judgments, the Tribunal highlighted that services used for modernization or setting up of factories, including consultancy services for power plant modernization, are eligible for Cenvat credit if they relate to the manufacturing business of the assessee.

5. Considering the submissions and precedents, the Tribunal concluded that the consultancy services for greenhouse gas emission reduction and carbon credit management under the Kyoto Protocol fall within the definition of 'input service.' The impugned order denying Cenvat credit due to lack of nexus was deemed incorrect and unsustainable in law.

6. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellant as per the Tribunal's decision and legal principles.

7. The judgment was pronounced in open court, affirming the entitlement of the appellant to Cenvat credit for the 'Consultancy and Certification Services' utilized in modernizing their power plant and reducing Green House Gases emissions in compliance with environmental regulations and international protocols.