2026 (3) TMI 971 - AT - Central Excise

Input service: Transporting mine rejects to dumping yards qualifies as input service, enabling cenvat credit entitlement.

Transporting and disposing of overburden/rejects from captive limestone mines was held to be integrally connected to extraction and thus qualifies as an ... Transporting reject/waste materials from captive limestone mines to dumping yards - input services under Rule 2(l) - eligibility for cenvat credit - connection/nexus between service and manufacturing/mining activity - whether the transporting reject/waste materials from the mines to the dumping yards is an ‘input service’ and the Appellant is eligible for availing cenvat credit on the above service? Input service - eligibility for cenvat credit - HELD THAT:- It is claimed that the transportation of reject/waste is connected directly or indirectly to the activity of mining and therefore such activity would definitely fall within the ambit of Rule 2(l) (ii) of CCR. It is found that removal and transportation of such rejects is a technical and essential requirement for unearthing limestone and is directly or indirectly connected to the mining/manufacturing activity. The Tribunal treated the activity as covered by the classification upheld in Thriveni Earthmovers (P) Ltd. [2009 (4) TMI 9 - CESTAT CHENNAI], observed that the Commissioner's reliance on an unrelated decision was misplaced, and held that the service-tax classification supporting treatment as mining-related services applies for the purpose of Central Excise credit as well. [Paras 4, 5, 6, 7] The transporting of rejects/waste from the mines to dumping yards is an input service within Rule 2(l) and the impugned denial of cenvat credit is set aside; the appeals are allowed with consequential benefits as per law. Final Conclusion: The Tribunal allowed the appeals, holding that removal, loading and transportation of mining rejects to dumping yards constitute an input service connected to mining/manufacturing under Rule 2(l) CCR 2004 and that the denial of cenvat credit in the impugned order was unsustainable. Issues: Whether transporting reject/waste materials from captive limestone mines to dumping yards constitutes an 'input service' within Rule 2(l) of the Cenvat Credit Rules, 2004 and whether the assessee is eligible to avail cenvat credit on service tax paid for such activity.Analysis: The Tribunal examined whether removal, loading and transportation of overburden/rejects is integrally connected to the extraction of limestone and thus falls within the ambit of input services under Rule 2(l) of the Cenvat Credit Rules, 2004. The factual finding is that removal of overburden/rejects is a technical and essential requirement for unearthing limestone and that loading and transport to dump yards is part of that process. The Tribunal considered earlier decisions addressing classification of such activities under service tax (including Thriveni Earthmovers (P) Ltd.) and found no binding distinction for purposes of cenvat credit under central excise; a prior Tribunal classification of the activity as mining-related service supports treating the activity as connected to production. The Commissioner's reasons - lack of nexus, disconnection from manufacturing, and non-classification as input service - were held to be legally unsustainable on the facts and authority relied upon was inapplicable or not distinguishing.Conclusion: The transporting of rejects/waste from the mines to dumping yards is an 'input service' within Rule 2(l) of the Cenvat Credit Rules, 2004 and the assessee is entitled to avail cenvat credit on the service tax paid for such activities; the impugned order is set aside and the appeals are allowed with consequential benefits, if any, as per law.