TaxTMI 
TaxTMI 
2015 (2) TMI 265
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....AT Credit on certain inputs and input services, which are utilized in discharging the Central Excise duty both by debiting in CENVAT Credit as well as through PLA. During scrutiny of the record by Revenue, it was noticed that the assessee have availed CENVAT Credit of Service Tax paid on Manpower Recruitment Services used for handling, loading and unloading of press-mud, compost and boiler ash, which attracted nil rate of duty during the period August, 07 to January, 2008. As the Revenue felt, by virtue of provisions of Rule 6(1) of Cenvat Credit Rules, the CENVAT Credit shall not be allowable on such quantity of input or inputs services, which is used in the manufacture of exempted goods or exempted services. Further, as per Explanation-II....
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.... baggase will become impossible which will hamper the generation of steam resulting into disruption in manufacture of sugar, molasses etc. Further, as per regulation of Pollution Control Board, the assessee cannot just throw away the boiler ash/press mud/spent wash, since it would cause air pollution as well as harm to human beings within the locality. The boiler ash though non-excisable, being non-manufactured product, they have to remove those waste from the equipments and dump the same in the compost pit where due to natural reaction the composting takes place and for this they have to use the labour & manpower for removing the same. Further, press-mud is obtained pursuant to filteration /fermentation of the sugar cane juice required for....
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....tory, for proper handling and composting and to maintain health, including waste in compost yard, the assessee hired the various labours through the Manpower Recruitment Agency, who were charging Service Tax on the charges which they were recovering from the assessee. Further, the said compost among others is used as fertilizers for agricultural purposes, hence the same was sold mostly to farmers and for other agricultural purpose. Thus, the said service is wholly attributable to the manufacture of excisable goods, being sugar, molasses, rectified spirit and denatured spirit. Accordingly, it is fully allowable as input services, and does not call for any disallowance under the scheme of the Act and Rules. The assessee further relied on the ....
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....lowed in favour of the respondent. 3. Being aggrieved, the Revenue is in appeal before this Tribunal on the ground that the Commissioner (Appeals) has failed to appreciate that as per Rule 3 of Cenvat Credit Rules, 2004, CENVAT Credit is available only on the final product and as compost and boiler ash are not final product of the assessee, therefore, CENVAT Credit on inputs service is not allowable in respect of the above services. Further, the Commissioner (Appeals) has erred in not considering the Explanation-III to Rule 6(3) wherein it is clarified that the credit shall not to be allowed on input services used exclusively for manufacture of exempted goods or exempted services. 4. Having considered the rival contentions, I find tha....
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....inal inputs. That itself cannot be taken to mean that the product emerged out of those wastes was also manufactured by using those cenvated credit inputs. 16. As rightly contended by the learned counsel for the assessee, the characteristic of sugar cane containing various chemicals cannot be stopped or prevented by the manufacturer to pass on even to the wastes, as it is undoubtedly a natural flow of in born character from one stage to another. Only when there is a further addition of inputs or chemicals with similar characteristics externally by the manufacturer, the Revenue can invoke Rule 57CC. In other words, when spent wash and press mud had emerged as inevitable wastes during the process of manufacturing of final products viz., sug....
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....he decision of the Apex Court reported in 2007 (214) E.L.T 481 (SC) (Collector of Central Excise V. Solaris Chemtech Limited) to contend that if manufacture of final product cannot take place without the process in question then that process is an integral part of the activity of manufacture of the final product. Thus, the learned counsel by taking support from such decision contended that the words "in relation to the manufacture of final product" should convey the expanded meaning in order to bring even the inputs which even do not enter into finished goods. In the above said decision of the Apex Court, the facts show that inputs viz., LSHS and furnace oil on which modvat credit availed have been used for generation of electricity, which ....