2016 (10) TMI 238 - AT - Service Tax

Cenvat Credit - input services - transportation cost of the hazardous waste which was generated during the course of manufacture of finished goods - Held that - without removing of hazardous waste from their factory the appellant is not able to run their factory therefore the removed of hazardous waste is essentially and transportation of the hazardous waste is entitled as input service to the appellant. - Credit allowed - Decided in favor of assessee.

Summary

Issues: Denial of cenvat credit on transportation of hazardous waste

Analysis:
The appellant, a manufacturer of MS Ingots, faced denial of cenvat credit on transportation of hazardous waste by the lower authority. The hazardous waste accumulated during the manufacturing process needed to be disposed of as per Pollution Control Board norms. The appellant removed the waste from the factory and claimed cenvat credit on transportation costs. However, the Revenue contended that since the waste was removed outside the factory, cenvat credit on outward transportation of hazardous waste did not qualify as an input service under Rule 2(I) of the Cenvat Credit Rules, 2004.

Various show cause notices were issued to the appellant leading to the denial of cenvat credit, demand for duty payment with interest, and imposition of penalties. The appellant challenged these orders, leading to the current appeal.

After hearing the arguments and considering the submissions, the tribunal found that the removal of hazardous waste was essential for the appellant to operate the factory. Therefore, transportation of the waste qualified as an input service necessary for the manufacturing process. Consequently, the tribunal held that the appellant correctly availed cenvat credit on transportation charges for the hazardous waste removal, overturning the lower authority's decision.

In conclusion, the tribunal ruled in favor of the appellant, setting aside the impugned orders and allowing the appeals with any consequential relief deemed necessary.