Custom, Excise & Service Tax Tribunal
Commissioner, Central Excise & Service ... vs M/S Kanoria Chemicals & Industries Ltd on 21 July, 2015
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad Appeal No.ST/13778/2014; ST/CROSS/10052/2015. [Arising out of OIA No.SUR-EXCUS-002-APP-090-14-15, dt.28.08.2014, passed by Commissioner (Appeals), Central Excise & Customs, Surat] Commissioner, Central Excise & Service Tax, Surat-II Appellant Vs M/s Kanoria Chemicals & Industries Ltd. Respondent
Represented by:
For Appellant: Shri T.K. Sikdar, Authorised Representative For Respondent: Shri Vinay Kansara, Advocate For approval and signature:
Honble Mr. H.K. Thakur, Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL) Date of Hearing/Decision:21.07.2015 Order No. A/11047 / 2015 dt.21.07.2015 Per: H.K. Thakur This appeal has been filed by the Revenue against OIA No.SUR-EXCUS-002-APP-090-14-15, dt.28.08.2014, issued on 02.09.2014, under which Commissioner (Appeals) has allowed CENVAT Credit on Effluent Treatment Plant services availed by the Appellant.
2. Shri T.K. Sikdar, learned Authorised Representative appearing on behalf of the Revenue argued that the services of pollution control are availed by the Respondent beyond the place of removal and the word activity relating to business has been omitted from the definition of input services under Rule 2(l) of CENVAT Credit Rules 2004 during the relevant period. It was his case that the case law of Honble Apex Court in the case of Indian Farmers Fertilizer Co-op. Ltd Vs CCE Ahmedabad 1996 (86) ELT 177 (SC) is not applicable. It was also argued by the learned Authorised Representative that mere inclusion of certain expenses in the assessable value of the final product will not make CENVAT Credit admissible as per law laid down by Apex Court in the case of Maruti Suzuki Ltd [2009 (240) ELT 641 (SC)].
3. Shri Vinay Kansara, learned Advocate appearing on behalf of the Respondent argued that under Section 25 of The Water (Prevention And Control of Pollution) Act, 1974, there are certain restrictions imposed upon the industry for controlling the effluent/discharge from factory premises. That Appellant has been issued permission by Gujarat Pollution Control Board to control discharge of hazardous waste in their effluent. He furnished copies of such permissions and made the Bench go through the restrictions imposed. He further made the Bench go through the provisions of Section 27 of The Water (Prevention And Control of Pollution) Act, 1974 and conditions imposed by Gujarat Pollution Control Board and emphasized that if the effluent/discharge by the Appellant does not conform to the specifications prescribed then the permission can be withdrawn, resulting into closure of Appellants factory. It was his case that in view of the above facts, the services availed for controlling pollution and quality of effluent, have to be considered in relation to manufacture of their goods. He relied upon the judgment of Honble Supreme Court in the case of Indian Farmers Fertilizer Co-op. Ltd Vs CCE Ahmedabad (supra).
4. Heard both the sides and perused the case records. The issue involved in the present appeal is whether certain pollution control services availed by the appellant are eligible to CENVAT Credit under CENVAT Credit Rules 2004 or not. Revenue filed this appeal on the ground that the activities in relation to business have been deleted from the definition of input services during the relevant period. It is observed from the permissions granted by Gujarat Pollution Control Board under The Water (Prevention And Control of Pollution) Act, 1974, that Appellant was required to maintain certain standards of effluent from Appellants factory as a mandatory and statutory necessity. When the activity is required to be done mandatorily under a statutory obligation, then it cannot be said that the same is not in relation to the manufacture of finished goods in Appellants factory. This principle was settled by Honble Supreme Court in the case of Indian Farmers Fertilizer Co-op. Ltd Vs CCE Ahmedabad (supra), where duty free raw material Naptha used for effluent treatment plant, was held to be eligible for exemption. Para 9 of this case law is relevant and is reproduced below:-
9. That leaves us to consider whether the raw? naphtha used to produce the ammonia which is used in the effluent treatment plant is eligible for the said exemption. It is too late in the day to take the view that the treatment of effluents from a plant is not an essential and integral part of the process of manufacture in the plant. The emphasis that has rightly been laid in recent years upon the environment and pollution control requires that all plants which emit effluents should be so equipped as to rid the effluents of dangerous properties. The apparatus used for such treatment of effluents in a plant manufacturing a particular end-product is part and parcel of the manufacturing process of that end-product. The ammonia used in the treatment of effluents from the urea plant of the appellants has, therefore, to be held to be used in the manufacture of urea and the raw naphtha used in the manufacture of such ammonia to be entitled to the said exemption.
5.1 In view of the above observations made by Apex Court, treatment of effluent from a factory has to be considered as essential and integral part of the process of manufacture. The ratio of this judgment will be applicable to the services availed by the Appellant. Accordingly, appeal filed by the Revenue is rejected and cross objection filed by Respondent is disposed of.
(Dictated and pronounced in Court) (H.K. Thakur) Member (Technical) cbb 4