2015 (10) TMI 1929 - AT - Service Tax

Denial of CENVAT Credit - maintenance of main road, residential colony electrical maintenance, residential telephone - Held that - So far as maintenance of STP is concerned, it was a requirement of the Pollution Control Board to set up the plant for affluent treatment and water which being scarce may be made free from pollution for reuse thereof without being used for human consumption. Pollution Control Board permits set up of such plant for effective utilization of the water resource which cannot be ignored. Therefore, it cannot be said that the STP is not the integral part of the factory as well manufacturing activity to manufacture caustic soda. Removal of effluence being one of the requirement of effective utilization of water for the factory through recycling process, denial of CENVAT credit for the maintenance of STP would be unreasonable. Therefore, appellant succeeds on this point and respective CENVAT credit claimed on such count is allowed. So far as the maintenance of main road, residential colony electrical maintenance, residential telephone at Kodaikanal, painting of office building are concerned, there is no nexus thereof to the manufacturing operation for which the appellant is not entitled to CENVAT credit on the service tax paid to avail such services - So far as the maintenance of the windmill is concerned, a windmill owner generating power at the source of wind may not have factory at the same place. Therefore, they exchange power generated by them with the Electricity Board at the point of generation for getting equivalent power at their place of manufacture. - Decided partly in favour of assessee.

Summary

Issues:
1. Jurisdiction of the Tribunal
2. Claim of CENVAT credit on inputs for STP
3. Claim of CENVAT credit on maintenance expenses
4. Claim of CENVAT credit on windmill operation

Jurisdiction of the Tribunal:
The judgment addresses the issue of jurisdiction concerning miscellaneous applications filed by the Revenue. The Tribunal dismisses the applications as the High Court of Madras holds jurisdiction over the cause of action, making the appeal to Bombay jurisdiction illogical. Consequently, other applications related to amending the cause title are also dismissed due to the initial jurisdiction ruling.

Claim of CENVAT credit on inputs for STP:
The appellant seeks CENVAT credit for inputs used in the Sewage Treatment Plant (STP) integral to the factory where caustic soda is manufactured. The Pollution Control Board mandated the STP to combat water pollution, making it a prerequisite for manufacturing activities. The Tribunal acknowledges the necessity of the STP for pollution control and allows the CENVAT credit on its maintenance, as denying it would hinder pollution control objectives.

Claim of CENVAT credit on maintenance expenses:
The appellant also claims CENVAT credit on maintenance expenses for various services like main road, residential colony electrical maintenance, etc. However, the Tribunal rules that these services lack a direct nexus to manufacturing operations, thus denying the appellant's entitlement to CENVAT credit for these expenses.

Claim of CENVAT credit on windmill operation:
Regarding the windmill operation, the appellant contends that inputs were used to generate power exchanged with the Electricity Board. Citing precedent cases, the Tribunal recognizes the legitimacy of claiming CENVAT credit on windmill maintenance, granting relief to the appellant on this issue.

In conclusion, the Tribunal fully allows Appeal Nos. E/440 & 442/2012 and partly allows Appeal No. E/441/2012. The judgment emphasizes the importance of the STP for pollution control and manufacturing activities, granting CENVAT credit for its maintenance. Additionally, it highlights the eligibility of claiming CENVAT credit for windmill operation based on established legal precedents. The Tribunal directs the appropriate authority to grant consequential relief in line with the decision.