2016 (5) TMI 1205 - AT - Central Excise

Eligibility of Cenvat credit - Debit notes raised for claiming reimbursement of rack handling charges, wagon handling charges and port railway usage charges and service tax thereon paid by them - Held that - by respectfully following the decision of Hon ble Apex Court in the case of Indian Farmers Fertilizer Coop Ltd. Vs CCE Ahmedabad 1996 (7) TMI 141 - SUPREME COURT OF INDIA and also by relying on the decision of Tribunal in the case of Shree Cement Ltd. Vs CCE Jaipur 2013 (3) TMI 79 - CESTAT NEW DELHI , the appellant is eligible for Cenvat credit. - Decided in favour of appellant

Summary

Issues:
1. Eligibility of cenvat credit on input services provided by specific companies.
2. Validity of availing cenvat credit based on debit notes issued by another company.
3. Interpretation of Rule 2(l) of CCR 2004 regarding Pollution Control Board certification as an input service.
4. Applicability of Rule 9(5) of CCR 2004 on cenvat credit eligibility.
5. Consideration of limitation period for claiming credit.

Analysis:
1. The case involved M/s. Agni Steels (P) Ltd., engaging in Sponge Iron manufacturing and availing cenvat credit on various services. The issue arose when the appellants claimed credit based on invoices from M/s. Ekdant Enviro Services Pvt. Ltd. & M/s. Enviro Care India Pvt. Ltd. for pollution control services and debit notes from M/s. KI (International) Ltd. for handling charges. The adjudicating authority ordered recovery of credit, upheld by the Commissioner (Appeals), leading to the appeal before the Tribunal.

2. The appellant's representative argued that the pollution control services were essential for compliance with Pollution Control Board regulations, emphasizing the mandatory nature of these services for continued manufacturing operations. Regarding cenvat credit based on debit notes, it was contended that the services were provided by M/s. Krishnapatnam Port Company Ltd. as an agent of the appellant, supported by relevant invoices.

3. The Revenue's representative focused on whether Pollution Control Board certification qualifies as an input service under Rule 2(l) of CCR 2004, citing precedents like Maruti Suzuki Ltd. Vs CCE Delhi and Vandana Global Ltd. Vs CCE Raipur. The issue of nexus with the manufacturing process was highlighted, along with the need for clear documentation for credit eligibility.

4. The appellant countered by challenging the applicability of Vandana Global Ltd. in the current scenario, referencing the Gujarat High Court's decision in Mundra Ports & Special Economic Zone Ltd. Vs CCE & Cus. The disagreement with the Maruti Suzuki Ltd. case was raised, supported by the interpretation of the term "include" in a Supreme Court ruling. The role of M/s. KI (International) Ltd. as an agent was reiterated, drawing parallels with legal precedents.

5. The Tribunal deliberated on the eligibility of cenvat credit on debit notes, citing the Shree Cement Ltd. case. It emphasized the essential nature of Pollution Control Board certification for factory operations, drawing parallels with a Supreme Court ruling on effluent treatment. By aligning with the Supreme Court's decision and relevant precedents, the Tribunal allowed the appeal on merits, bypassing the limitation aspect.

In conclusion, the Tribunal's decision was based on the essentiality of pollution control services and the validity of cenvat credit claims through debit notes, aligning with legal interpretations and precedents to grant relief to the appellant.