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2023 (1) TMI 737 - CESTAT KOLKATAIrregular availment of CENVAT Credit - input services - transport service of Fly Ash - services obtained by the appellant for removal of coal fly ash from the captive power plant which is used for generation of power, which in turn, is captively consumed for manufacture of excisable goods - denial on the premise that it has no nexus directly or indirectly in or in relation to manufacture and clearance of the final products upto the place of removal - HELD THAT:- The removal of coal fly ash from captive power plant is a necessity and without such removal, the captive power plant cannot work. As such, removal of coal fly ash is admittedly connected with the production of power, which in turn, has nexus with the manufacturing of the Appellant’s final product. Revenue’s objection is that since the coal fly ash is non-excisable item, removal of the same cannot be held to be an input service, cannot be appreciated, inasmuch as the admissibility of the input service credit is not dependent upon the product, in respect of which services are availed, to be excisable or non-excisable. Admittedly the Appellant’s final product was excisable and was cleared on payment of duty. In fact, the Appellant had been duly discharging appropriate Excise Duty on clearance of the Ash considering it as a finished product under the Central Excise Act, 1944. The impugned order clearly records that the Appellant has undertaken various activities of removal/disposal of Fly Ash in terms of mandate of Ministry of Environment and Forest. He also recorded that while process is to fulfil action being environment friendly, however, he proceeded to record removal of Fly Ash to protect environment is not on account of manufacture of finished goods - the removal and disposal of Fly Ash in a manner prescribed by the Government is a mandate requirement for continued production of electricity for activities used by the Appellant. In other words, without such due disposal of Fly Ash, generation of electricity cannot happen. The removal of coal Fly Ash is one of the necessity for running of the captive power plant. Without such removal of the coal fly ash from the captive power plant, the same cannot operate and run, in which case, the power won’t be generated and the appellant would not be in a position to manufacture their final product - the appellants are entitled to service tax paid on the services used by them for removal of coal fly ash from the captive power plant. Denial of benefit of credit of input services used for removal and disposal of Fly Ash is not sustainable - Appeal allowed.
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