2021 (11) TMI 832 - AT - Central Excise

CENVAT Credit - input services - GTA services for carrying the waste namely sludge to the dumping yards - HELD THAT - The appellants have to remove the waste from the factory to the demarcated dumping yards as required by the Pollution Control Board. If they do not comply with this mandatory requirement, their license for manufacture will be cancelled. Therefore, it can be stated that these services availed by the appellant are in relation to the activity of manufacture within the factory. The very same issue is considered by the Tribunal in the case of AMPHENOL INTERCONNECT INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE PUNE 2018 (9) TMI 810 - CESTAT MUMBAI where it was held that the service tax paid for transportation of such waste material should be considered as input service, for the purpose of availment of Cenvat benefit. The credit availed by the appellant is eligible - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of credit availed on GTA services for waste transportation.
2. Interpretation of "inputs services" under Cenvat Credit Rules 2004.
3. Compliance with Pollution Control Board regulations in waste disposal.

Analysis:
1. The case involved the eligibility of appellants for the credit availed on GTA services used for transporting waste from the factory to dumping yards. The dispute arose when the department contended that the service tax paid for GTA services did not qualify as "inputs services" under the Cenvat Credit Rules 2004. The original authority disallowed the credit, leading to penalties and duty demands. The Commissioner (Appeals) upheld the decision, prompting the appellants to appeal to the Tribunal.

2. The appellant argued that the GTA services were essential for removing waste, such as 'sludge,' generated during the manufacturing process to comply with Pollution Control Board standards. The appellant contended that since compliance was mandatory for maintaining their manufacturing license, the services were directly related to manufacturing activities and thus eligible for credit. The appellant cited previous Tribunal decisions, including Shriram Rayons and Amphenol Interconnect India Pvt. Ltd., to support their claim.

3. The Tribunal analyzed the issue by referring to the decision in Shriram Rayons, where it was established that transportation services for waste disposal, mandated by pollution control laws, are integral to the manufacturing process. The Tribunal emphasized that the disposal of waste was a statutory obligation necessary for continued manufacturing operations. Similarly, in the case of Amphenol Interconnect India Pvt. Ltd., the Tribunal recognized the importance of waste disposal for maintaining manufacturing operations and complying with pollution control norms. The Tribunal concluded that the credit availed by the appellant was eligible, setting aside the impugned order and allowing the appeal with consequential relief.

This detailed analysis highlights the core issues of credit eligibility, interpretation of "inputs services," and the importance of compliance with Pollution Control Board regulations in waste disposal, as addressed in the legal judgment by the Appellate Tribunal CESTAT CHENNAI.