2018 (8) TMI 16 - AT - Service Tax

CENVAT Credit - input services - services of handling contractors for lifting and disposal of hazardous waste from the factory - Held that - The fact is not under dispute that the hazardous waste in the form of sludge, solid waste, generated from effluent treatment plant were required to be removed from the factory, in order to keep the environment free and unpolluted - Considering the nature of waste generated by the manufacturer and its effect on the environment, the Maharashtra State Pollution Control Board, the regulatory authority for pollution control, have also prescribed the norms for disposal of hazardous waste from the factory. It has been decided in the case of Vardhman Special Steels Ltd. vs. CCE & ST, Chandigarh 2016 (10) TMI 238 - CESTAT CHANDIGARH , that disposal of hazardous waste is an essential activity for manufacture of final product and the services availed for such activity should be considered as input service. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of CENVAT Credit for services of handling contractors for lifting and disposal of hazardous waste.

Analysis:
The appeal was against an order by the Commissioner of Central Tax (Appeals) denying CENVAT Credit to the appellant for services of handling contractors for lifting and disposal of hazardous waste. The appellant, engaged in manufacturing optical fibers and wires, argued that the services were essential for compliance with pollution control requirements set by the Maharashtra State Pollution Control Board. The appellant contended that the services should be considered as input services eligible for CENVAT Credit. The appellant cited various tribunal decisions and a High Court decision to support their argument.

The Revenue, represented by the Departmental Representative, supported the findings of the impugned order denying CENVAT Credit. After hearing both sides and examining the records, the Tribunal noted that the hazardous waste needed to be removed from the factory to maintain environmental standards. The Maharashtra State Pollution Control Board had prescribed norms for the disposal of hazardous waste. Given the nature of the waste and its impact on the environment, the services provided by handling contractors for lifting and disposal of hazardous waste were deemed essential. The Tribunal found that the decisions cited by the appellant were applicable to the case, supporting the availment of CENVAT Credit for the service tax paid on such services.

Based on the settled legal position that disposal of hazardous waste is crucial for manufacturing final products and services for such activities should be considered as input services, the Tribunal concluded that denying CENVAT Credit to the appellant for the services received was unjustified. Therefore, the impugned order was set aside, and the appeal was allowed in favor of the appellant.

The judgment delivered by Member (Judicial) S.K. Mohanty highlighted the importance of considering services related to the removal of hazardous waste as input services eligible for CENVAT Credit, in line with pollution control requirements and established legal precedents.