The Ahmedabad bench of the Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) held that cenvat credit cannot be denied stating service availed was beyond the place of removal. It was observed that the services related to effluent treatment are admissible input service and credit is admissible.
The issue involved in the present case is whether the appellant, Coromandel International Ltd is entitled to Cenvat credit on the services related to the effluent treatment of the waste generated at the appellant’s factory and such effluent treatment service availed from the third-party agency i.e. Narmada Clean Tech Ltd, Saurashtra Enviro Projects Pvt Ltd and Bharuch Enviro Infrastructure Ltd.
Shri Prakash Shah, Counsel along with Shri Mihir Mehta, Advocate and Shri Mohit Raval, Advocate appeared on behalf of the appellant and submitted that in many judgements, the Supreme Court held that the services related to effluent treatment are admissible input service and credit is admissible.
The Revenue contended that the effluent treatment of waste is not related to the manufacture of the final product, therefore, it does not have a nexus with the manufacturing activity of the appellant.
The revenue also raised the contention that such effluent treatment services were availed beyond the place of removal; this issue has been considered by the Bombay High Court in the case of Deepak Fertilizers & Petrochemicals Corp. Ltd vs. C.C.Ex., Belapur where it was held that “Rule 3(1) allows a manufacturer of final products to take credit inter alia of Service Tax which is paid on (i) any input or capital goods received in the factory of the manufacturer of the final product; and (ii) any input service received by the manufacturer of the final product.”
“Rule 2(l) initially provides that input service means any services of the description falling in sub-clauses (i) and (ii). Rule 2(l) then provides an inclusive definition by enumerating certain specified services. Among those services are services for the procurement of inputs and inward transportation of inputs. The Tribunal proceeded to interpret the inclusive part of the definition and held that the Legislature restricted the benefit of Cenvat credit for input services used in respect of inputs only to these two categories viz. for the procurement of inputs and the inward transportation of inputs. This interpretation which has been placed by the Tribunal is ex facie contrary to the provisions contained in Rule 2(l). The input services in the present case were used by the appellant whether directly or indirectly, in or about the manufacture of final products. The appellant, it is undisputed, manufactures dutiable final products and the storage and use of ammonia is an intrinsic part of that process.”
A two-member bench comprising of Mr Ramesh Nair, Member ( Judicial ) and Mr Raju, Member ( Technical ) observed that the revenue’s claim that since the service was availed beyond the place of removal, credit is not admissible completely fails and, on that ground, credit cannot be denied.
The CESTAT held that the appellant is legally entitled to availment of Cenvat credit in respect of effluent treatment service and set aside the impugned order allowing the appeal.
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