2015 (11) TMI 1617 - AT - Central Excise

Tribunal grants appeal on cenvat credit denial for factory drain construction, citing statutory compliance and cost of production.

M/s Hindustan Zinc Ltd. Versus CCE & ST, Jaipur-I

M/s Hindustan Zinc Ltd. Versus CCE & ST, Jaipur-I - 2016 (45) S.T.R. 571 (Tri. - Del.) Issues: Denial of cenvat credit on construction service for building a drain within the factory premises.Analysis:1. The appellant's cenvat credit on the construction service for building a drain within the factory premises was denied, as the Department argued that the drain was constructed to prevent water from entering the factory, with no nexus to the manufacture or sale of the final product.2. The appellant's advocate argued that maintaining cleanliness in the factory environment is a statutory requirement under Section 11 of the Factories Act, 1948, and thus, the cenvat credit for the input service cannot be denied. Reference was made to a previous Tribunal decision to support the claim for Cenvat benefit.3. The Department's representative reiterated the findings of the impugned order denying the cenvat credit on the construction service.4. The Tribunal considered the arguments from both sides and examined the records.5. The Tribunal noted that the input service was used for constructing drains within the factory, which is essential for complying with statutory requirements under the Factories Act. The expenses for the input service were included in the cost of production for determining the assessable value. The Tribunal highlighted that during the period in question, the input service definition did not exclude activities related to business. Citing a previous case where a similar appeal was allowed, the Tribunal concluded that the denial of cenvat credit in the impugned order was not legally justified. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.