2018 (4) TMI 1489 - AT - Central Excise

CENVAT credit - input service - services of disposal of effluents arising during the course of manufacture in the appellant s premises or otherwise - Held that - the issue is no more res integra, as it has been made mandatory that the wastes of any kind waste needs to be treated before disposing them as per the directions and guidelines of Ministry of Environment and Forest; the State Pollution Control Boards are required to supervise/monitor the said disposal being done as mandated. In the case in hand, the waste disposal arising in the appellant s factory is being monitored and disposed of as per the guidelines by authorised agencies of Andhra Pradesh State Pollution Control Board. CENVAT credit of service tax paid on the activity of waste disposal by service provider allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of CENVAT credit for service tax paid by service providers in disposal of effluents during manufacturing process.

Analysis:
The appeal addressed the denial of CENVAT credit for service tax paid by service providers in disposing of effluents during the manufacturing process. The appellant, a manufacturer of bulk drugs and chemicals, generated waste that required treatment and disposal as per regulatory guidelines. The service providers were authorized by the Pollution Control Board to collect, treat, incinerate, and dispose of the waste, charging service tax on the appellant. The Revenue argued that such services did not qualify as input services under the CENVAT Credit Rules 2004. However, the Tribunal noted that waste treatment before disposal was mandatory under environmental regulations, with supervision by the Pollution Control Board. The disposal process was integral to the manufacturing operation and fell within the definition of input services.

In a similar case, the Tribunal had ruled in favor of the appellant, emphasizing the importance of waste disposal in environmental protection and its connection to the manufacturing process. The disposal of industrial effluents was considered vital for environmental safeguarding, governed by statutory laws. The disposal services provided by an independent agency were deemed integral to the manufacturing process, qualifying as input services under the CENVAT Credit Rules. Consequently, the Tribunal allowed the appeal, overturning the impugned order and granting relief to the appellant for availing CENVAT credit on service tax paid for waste disposal services.

In conclusion, the Tribunal, following precedent and considering the environmental regulations and the integral nature of waste disposal in the manufacturing process, held that the appellant was eligible to claim CENVAT credit for service tax paid on waste disposal activities by the service provider. The impugned order was set aside, and the appeal was allowed in favor of the appellant.