2019 (11) TMI 559 - HC - Central Excise

CENVAT Credit - input - cement used as an input to stabilize hazardous waste generated in the manufacture of its final products zinc and lead - period of April 2013 to September 2013 - HELD THAT - The interpretation of the CESTAT of the expression input as covering all goods used in a factory by a manufacturer of any final product - as evident from the words final product , re-enforces the intention of rule making authority to expand the definition and provide the benefit of input credit even to the processes which are not intrinsically covered or do not have a direct link with the manufacture of the final product. This aspect assumes significance in the present case since the input is used to stabilize a by-product, a hazardous waste, which is not permitted to be handled and transported without stabilizing, under the other laws. The use of cement as a stabilizing agent in the factory at the stage of treatment of hazardous waste can be said to be goods used in the factory by the assessee/manufacturer of a final product - appeal dismissed - decided against appellant.

Summary

Issues:
Grant of input credit for cement used as a stabilization agent for hazardous waste generated by the respondent manufacturer.

Analysis:
1. The appeal before the High Court pertained to the grant of input credit for cement used as a stabilization agent for hazardous waste generated by the respondent manufacturer. The Revenue contended that the input credit could not be granted for cement used in this manner.

2. The respondent manufacturer availed Cenvat credit for cement used to stabilize hazardous waste generated during the manufacture of zinc and lead products. The Commissioner disallowed the credit, directing payment of a specified amount along with interest and imposing a penalty.

3. The respondent appealed to CESTAT, arguing that an amendment to Rule 2(k) of the Cenvat Credit Rules, 2004 expanded the scope of articles and processes eligible for input credit. CESTAT, relying on a previous ruling, held that the input credit was rightly claimed and set aside the Commissioner's order.

4. The Revenue's counsel argued that a direct link between the use of input goods and the final output is essential, as per the definition of "Input" in Rule 2(k).

5. The Court considered the pre-amended and amended definitions of "Input" under the Cenvat Credit Rules, 2004. The amended definition broadened the scope to include all goods used in the factory by the manufacturer of the final product.

6. Referring to a Supreme Court judgment, the Court emphasized the importance of environmental regulations and pollution control in manufacturing processes. The Court interpreted the definition of "input" to cover goods used in a factory by a manufacturer of any final product, even if they do not have a direct link with the final product's manufacture.

7. The Court concluded that the use of cement as a stabilizing agent for hazardous waste in the factory qualifies as goods used in the factory by the manufacturer of a final product. Therefore, the Court dismissed the appeal, finding no merit in it and stating that no substantial question of law arose in this case.