TaxTMI 
TaxTMI 
2016 (9) TMI 677
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....pellants company by the Accountant General Audit party, it was noticed that the appellant has wrongly availed and utilized the service tax credit of Rs. 8,54,471/- during the month of December 2008 in respect of the Consultancy Services provided by M/s CARE Sustainability on Clean Development Mechanism (CDM) Service in relation to Carbon Credit Management Services , which appeared to be not covered under the definition of input service as contemplated under Rule 2(l) of the Cenvat Credit Rules, 2004. Therefore, a Show-Cause Notice dated 21.3.2011 was issued to the appellant proposing demand of Rs. 8,54,471/- attributable to Cenvat credit wrongly availed on Clean Development Mechanism Service in relation to Carbon Credit Management Services. The appellant refuted the allegation in the show-cause notice and the learned Additional Commissioner vide his order dated 23.11.2011 rejected the submissions of the appellant and confirmed the demand as per the show-cause notice along with interest and penalty. Aggrieved by the said order, the appellant filed an appeal before the Commissioner (Appeals) who upheld the demands as confirmed in the Order-in-Original. Hence the present appeal before....
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....s of reduced emission norms. 3.1. The learned counsel also submitted that as per the agreement with M/s CARE Sustainability, the following services are to be provided by way of consultancy services : (a) Preparation of project design documents addressing the requirements under the Kyoto Protocol; (b) Assistance in obtaining approvals from Ministry of Environment & Forests; (c) Assistance in validation and monitoring of the project in terms of meeting the requirements of reduced emission norms; (d) Assistance in obtaining certified emissions reductions (CERs); and (e) Transaction of CERs. He also submitted that the consultancy service received by the appellants as per the mandatory requirement of Kyoto Protocol are in relation to the manufacture as it will reduce the use of clinker in the manufacture of cement and also reduce the emission of CO2. 3.2. The learned counsel further explained the concept of Carbon Credit in the Memorandum of Appeal which as follows : (i) The concept of Carbon Credit has been introduced as an instrument to reduce the emission of gasses that cause the greenhouse effect. It s main aim is to incentivize the unit which pollute less....
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....011 (24) S.T.R. 32 (Tri.-Ahmd.)] 4. On the other hand, the learned A.R. for the Respondent-Revenue submitted that the services provided by the service provider is related to certification of less emission of carbon di-oxide and the said service enables the appellant to earn Carbon Emission Certificates which can be traded in the market. He also submitted that the inclusive part of the definition restricts its scope to the services used in relation to the manufacture or business activity of the kind to give effect to the activities of business and does not include welfare and general activities. He also submitted that the impugned service received by the appellant has no nexus with their manufacturing activity and hence, the same cannot be treated as input service in terms of Rule 2(l) of the Cenvat Credit Rules, 2004. He also submitted that the fact of availment of irregular credit came to the knowledge of the department during the audit and hence, the invocation of longer period and imposition of penalty is justified. 5. Heard both the parties and perused the records. 6.The only issue involved in the present case is whether the appellants are entitled to service tax....
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....elates to the manufacture of final product is concerned), consists of three categories of services. The first category, covers services which are directly or indirectly used in or in relation to the manufacture of final products. The second category, covers the services which are used for clearance of the final products up to the place of removal. The third category, includes services namely; (a) Services used in relation to setting up, modernization, renovation or repairs of a factory, (b) Services used in an office relating to such factory, (c) Services like advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, (d) Activities relating to business such as, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit relating, share registry and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal. Thus, the definition of input service not only covers services, which fall in the substantial part, but also covers services, which are covered under the inclusive part of the....
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.... Certified Emission Reduction Sale (hereinafter referred to CERS). Such earning of CERS is on account of appellant having entered into an agreement with M/s. EDF Trading Ltd., company organised under the laws of England. This seems to be scheme for encouraging manufacturer to use fossil fuel to develop their plant in such a manner so as to reduce the carbon emission which vitiates atmosphere. The revenue s contention that such earning of carbon credit from the United Nations company was not liable to Service Tax and inasmuch as the services of E & Y were availed for earning of such credits, the appellant is not entitled to avail the credit. 6. I find no merits in the above contention of the Revenue. The services availed from M/s. Ernst & Young Pvt. Ltd., were admittedly for modernisation of the power plant of the appellant. Such power plant is used for manufacture of paper which is liable to Central Excise. In addition, if the appellant, by way of entering into an agreement with the England based company gets profit by way of earning carbon credit, it cannot be held that said services of M/s. Ernst & Young Pvt. Ltd., were for the purpose of earning the credit. I fully agre....