2020 (1) TMI 582 - AT - Central Excise

CENVAT Credit - input services - transportation and Toll charges - transportation of sludge and waste cleared from their factory for manufacture of their final product - HELD THAT - In terms of Rule 2(l) of Cenvat Credit Rules 2004 the Cenvat credit is disallowed for finished goods to be cleared to the place of buyer beyond the place of removal. In this case there is no buyer of this sludge cleared by the appellant. Moreover the same is required to be dumped in terms of the Rajasthan State Pollution Control Board s direction to run their factory - Therefore the appellant is mandatory required to clear the sludge from their factory and for clearance of the said sludge the appellant availed transportation services which are like transportation charges paid for procurement of inputs by the appellant for manufacture of their final product. The appellant is entitled to avail Cenvat credit on transportation/Toll charges in question and the facts of the case of Ultra Tech Cement Ltd. 2018 (2) TMI 117 - SUPREME COURT are not applicable to the facts of the case as in the said case Hon ble Apex Court came to examine the issue of transportation of goods beyond the place of removal up to the place of buyer. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of Cenvat credit on transportation and Toll charges for clearance of waste sludge.

Analysis:
The appellant, a manufacturer of various products, faced denial of Cenvat credit on transportation and Toll charges for clearing waste sludge as per Rajasthan State Pollution Control Board directives. The service provider invoiced the charges separately but paid service tax on the total amount. The adjudicating authority disallowed credit on transportation and Toll charges beyond the place of removal, citing a previous decision. The appellant argued that the transportation charges were essential for waste clearance, not for goods transportation to buyers, citing precedents supporting their claim. The Tribunal noted the statutory obligation to clear waste for factory operations and allowed the credit based on a similar case precedent involving disposal of waste materials. The Tribunal differentiated the present case from a previous Supreme Court ruling on transportation up to the buyer's place, emphasizing the unique circumstances. Consequently, the impugned order was set aside, and the appeal was allowed with consequential benefits.