Services for treatment of industrial waste in relation to overall manufacturing activity are input services: CESTAT allows cenvat credit [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed cenvat credit and observed that the services for the treatment of industrial waste in relation to overall manufacturing activity are input services.

As per the consent of pollution control board, the appellant, Cheminova India Limited, is required to ensure that air and water discharge meets the parameters specified in the permission, to meet such requirements the appellant has availed the service of effluent treatment before discharge of the effluent arises during the manufacture.

If the effluent is discharged without being treated then the permission granted by the Gujarat Pollution Control Board to the appellant to manufacture the goods will be cancelled and thereby they will have to stop manufacturing activity. The appellant has availed the cenvat credit in respect of the services received in relation to effluent treatment of the industrial waste.

The case of the department is that the said cenvat credit is not admissible to the appellant on the ground that the effluent treatment activity is post manufacture and the same is not used in or in relation to manufacture of final product accordingly, the cenvat credit so availed by the appellant was denied therefore, the present appeals filed by the appellant.

Mehul Jiwani, Chartered Accountant appearing on behalf of the appellant submitted that if the industrial waste arising during the course of manufacture is not treated in the effluent treatment plant and the treated water is not discharged, the permission can be cancelled and without permission the appellant cannot run the production. It is therefore, the effluent treatment activity is necessary to carry out the uninterrupted production activity of the appellant therefore, the activity is in relation to manufacture of final product. Accordingly, the cenvat credit is admissible.

A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “It can be seen that the issue is no longer res-integra as the services availed in respect of effluent treatment plant for treatment of industrial waste is in relation to the overall manufacturing activity of the appellant’s final product in the appellant’s factory therefore, the said services are input service hence, the credit is admissible.”

To Read the full text of the Order CLICK HERE

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