2016 (8) TMI 724 - AT - Service Tax

Manufacturer wins appeal for Cenvat credit on waste disposal transportation charges

India Pesticides Ltd. Versus Commissioner of C. Ex. & S.T., Lucknow

The Tribunal allowed the appeal by a manufacturer of insecticides, holding that transportation charges for waste disposal are eligible for Cenvat credit ... Cenvat credit - availed on transportation charges in the process of cleaning and disposal of waste - prescribed document to avail credit as per the provisions of Rule 9(1)(e) of Cenvat Credit Rules, 2004 - nexus with manufacture and clearance of goods, upto the place of removal - ambit of the definition of input service, in terms of Rule 2(1) of CCR, 2004 - Held that:- the disposal of hazardous waste by the appellant is an essential activity, without which, the final products being excisable insecticides, cannot be manufactured. Thus, the transport service in question have been incurred in relation to the manufacture of final taxable products. - Decided in favour of appellant with consequential relief Issues: Disallowance of Cenvat credit on transportation charges for disposal of hazardous waste.Analysis:1. The appellant, a manufacturer of insecticides, appealed against the disallowance of Cenvat credit on transportation charges for waste disposal.2. The Revenue contended that the credit was inadmissible as it lacked prescribed documents and did not have a nexus with the manufacturing process.3. The Order-in-Original confirmed the demand, imposing penalties under Rule 15 of CCR.4. The Commissioner (Appeals) partially allowed the appeal, disallowing the credit for waste disposal transportation charges.5. The appellant argued that waste disposal is essential for manufacturing taxable products and falls under the definition of input services.6. The appellant referenced a previous Tribunal ruling supporting the integral connection between waste disposal and manufacturing expenses.7. The Revenue supported the impugned order disallowing the credit.8. The Tribunal held that waste disposal is crucial for manufacturing insecticides, making the transportation charges eligible for Cenvat credit.9. The impugned order disallowing the credit was set aside, and the appellant was granted consequential benefits.10. The penalty imposed by the Commissioner (Appeals) was also set aside.This detailed analysis covers the issues involved in the legal judgment regarding the disallowance of Cenvat credit on transportation charges for the disposal of hazardous waste, providing a comprehensive overview of the arguments and the Tribunal's decision.