Cenvat credit on cement used for hazardous waste stabilisation was allowed where the use was integral to manufacturing activity.

Cenvat credit on cement used to stabilise and dispose of hazardous waste generated during zinc smelting was held admissible because the use was integrally connected with the manufacturing activity and environmental compliance. The Tribunal relied on its earlier identical decisions, including the appellant's own case, where securing waste at a landfill was treated as part of manufacture. Denial of credit and consequential penalty was therefore unsustainable, and the impugned order was set aside.

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Issues: Whether cenvat credit on cement used for stabilization and disposal of hazardous industrial waste generated in the course of zinc smelting was admissible, and whether denial of such credit and consequential penalty was sustainable.

Analysis: The dispute turned on whether the use of cement for securing and neutralising hazardous waste formed part of the manufacturing activity. The Tribunal noted that in the appellant's own earlier case on identical facts, credit on cement had already been allowed on the footing that stabilizing hazardous waste at a secured landfill was integral to the manufacturing process. That view had also been followed in later Tribunal decisions. In light of the settled position, the use of cement for environmental compliance and waste management could not be treated as unrelated to manufacture.

Conclusion: Cenvat credit on cement was admissible and the denial of credit and penalty could not be sustained.

Final Conclusion: The impugned order was set aside and the appeal was allowed.

Ratio Decidendi: Where cement is used for stabilization and disposal of hazardous waste generated during manufacture and such use is integrally connected with the manufacturing activity, cenvat credit cannot be denied on the ground that the cement is not directly used in producing the final goods.

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