2018 (1) TMI 362 - AT - Central Excise

Cenvat Credit - whether the respondent is entitled to service tax paid on the services utilized for removal of hazardous waste? - Held that - Tribunal in the case of Tube Investment of India Ltd. v. Commissioner of Service Tax, LTU, Chennai 2017 (10) TMI 737 - CESTAT CHENNAI , wherein the said services were held to be Cenvatable - appeal dismissed - decided against Revenue.

Summary

Issues involved: Whether the respondent is entitled to service tax paid on services utilized for removal of hazardous waste.

Analysis:

1. Issue of Entitlement to Service Tax: The main issue in this case was whether the respondent was entitled to claim service tax paid on the services used for the removal of hazardous waste. The Commissioner(Appeals) had ruled in favor of the assessee, stating that the hazardous waste generated during the manufacturing process was unavoidable and necessary for the manufacturing of final products. The waste needed to be disposed of as per the Hazardous Waste Rules, and since the appellant did not have in-house disposal facilities, they had to send it to an authorized facility. The disposal of hazardous waste was deemed as part of the manufacturing activity and had a direct nexus with the manufacturing process. The Tribunal referred to a previous case law to support this argument, emphasizing that the disposal of hazardous waste was integral to the manufacturing process. Therefore, the services provided by the disposal facility were considered input services eligible for Cenvat Credit.

2. Precedent and Legal Interpretation: The Tribunal referred to a previous judgment in the case of Indian Farmers Fertilizers Co-Op Ltd. vs. CCE, Ahmedabad, where it was held that directions from the Pollution Control Board were part of the manufacturing activity, and equipment used for pollution control was necessary for post-manufacturing activities. This precedent was cited to establish that the disposal of hazardous waste, as required by the Pollution Control Board, was directly related to the manufacturing activity. The hazardous waste generated during the manufacturing process had to be disposed of as per statutory requirements, and this disposal was considered an integral part of the manufacturing process, further reinforcing the entitlement of the appellant to claim Cenvat Credit on the service tax paid for waste disposal.

3. Judicial Precedent and Rejection of Appeal: The Tribunal also considered a previous case involving Tube Investment of India Ltd., where similar services were held to be Cenvatable, further supporting the decision in the present case. Based on the legal interpretations, precedents, and the specific circumstances of the case, the Tribunal found no fault with the order of the Commissioner(Appeals) and rejected the Revenue's appeal. The disposal of hazardous waste was deemed essential for compliance with environmental regulations and was directly linked to the manufacturing process, justifying the eligibility of the appellant for Cenvat Credit on the service tax paid for waste disposal.

In conclusion, the judgment upheld the entitlement of the respondent to claim service tax paid on services used for the removal of hazardous waste, emphasizing the integral connection between waste disposal and the manufacturing process as mandated by environmental regulations and legal precedents.