waste material sent to Govt. Waste Hazardous plant, Central Excise

[sukhvinder singh]

Dear Sir ,

We are a manufacturing company , during the process some wastage arise , after treatment in the ETP  we dispatched the solid waste to Govt. waste and hazardous plant , when we dispatched the waste to the said plant we have not genrated any invoice as there is no value involved , even we paid  disposed off  charges to the said plant and claimed the service tax as input .

Department is dening the service tax credit and demanding the duty on the said material

Please give your expert opinion with the supportive circullar or judgement as available .

Thanks

Posts / Replies

[Pradeep Khatri]

Date of Decision : 21.12.2010

ULTRATECH CEMENT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR (2010 (12) TMI 90 - CESTAT, MUMBAI)

Appellant Rep by: Shri.Bharat Raichandani, Adv.
Respondent Rep by: Shri.Manish Mohan, SDR,

CORAM: P G Chacko, Member (J)

Certification of pollution level in factory premises - It is nobody's case that there is no connection between the manufacture of cement by the appellant and the pollution caused by such activity - Availment of CENVAT credit of Service tax paid by agencies conducting such certification is proper in law – Appeals allowed

It is a settled legal position that departmental authorities having jurisdiction over the service recipient/manufacturer of final products cannot sit in judgement over the taxability of the service or excisability of the inputs, which function belongs to the departmental authorities having jurisdiction over the service provider/input manufacturer.

Case laws relied upon –

CCE & CC Vs. Laxmi Metal Pressing Works Pvt Ltd. - ( 2009-TIOL-2002-CESTAT-Mum )

Multi Organics Pvt Ltd., Vs. CCE - ( 2009-TIOL-1920-CESTAT-Mum )

Spic (HCD) Ltd., Vs. CCE - ( 2006-TIOL-2016-CESTAT-Mad )

CCE Vs. Toyo Engineering India Ltd. - ( 2006-IST-15-SC-CUS) .

Stay order reported as 2009-IST-853-CESTAT-MUM

ORDER NO: A/54-55/11/SMB/C-IV

Per: P G Chacko:

1. In these appeals filed by the assessee, the short question to be considered is whether they were entitled to avail CENVAT credit of the service tax paid on certification of pollution level during the period of dispute. The appellant is engaged in the manufacture of cement, which is governed by the pollution control law. This law requires periodical certification of pollution level in the factory premises. Under Section 25 of the Water (Prevention and Control of Pollution) Act, 1974, the state pollution control board shall grant consent to establish cement industry by imposing conditions including establishment and maintenance of effluent waste treatment and disposal system. Similar conditions are imposed under Section 21 of the Air (Prevention and Control of Pollution) Act, 1981. The manufacturer is also responsible for proper handling of waste under the provisions of Hazardous Wastes (Management and Handling) Rules, 1989. As required by the law, the appellant availed the service of certification of pollution level in their factory premises, from two agencies viz., Vimta Labs Ltd., and Ashwamedh Engineers and Consultants during the period of dispute. They also took CENVAT credit of the service tax paid by the said agencies on the service of certification of pollution level. In the relevant show-cause notices, the department sought to recover the amounts of CENVAT credit from the appellant under Rule 14 of the CENVAT credit Rules, 2004 read with Section 11A of the Central Excise Act on the ground that any service in relation to inspection or certification of pollution level was not a taxable service and consequently credit of any service tax on such service was not admissible. This proposal was contested by the appellant. In adjudication of the dispute, the original authority confirmed the demand of duty against the appellant and imposed penalties. The appellate authority upheld the orders of adjudication.

2. In the present appeals, the learned Counsel for the appellant has relied on case law in support of his argument that it was not open to the lower authorities to examine the taxability of the service, which function belonged to domain of the service tax authorities at the service-providers' end. Some of the decisions cited by the Counsel are the following:-

i) CCE & CC Vs. Laxmi Metal Pressing Works Pvt Ltd., - ( 2009-TIOL-2002-CESTAT-Mum ) 2010 (18) STR 149 (T)

ii) Multi Organics Pvt Ltd., Vs. CCE - ( 2009-TIOL-1920-CESTAT-Mum ) = 2010 (253) ELT 804 (Tri.)

iii) Spic (HCD) Ltd., Vs. CCE - ( 2006-TIOL-2016-CESTAT-Mad ) = 2010 (201) ELT 386 (Tri-Chennai)

3. In the first case, the Revenue wanted to deny CENVAT credit to the principal manufacturer in respect of service rendered by their job worker, on the ground that the job worker was not liable to pay service tax on the said service and, consequently, the principal manufacturer was not entitled to claim credit thereof. This view of the Revenue was rejected by the Tribunal which held that the CENVAT credit of the service tax paid by the job worker was available to the service recipient under Rule 3 of the CENVAT credit Rules, 2004. In the second case, Multi Organics Ltd., (supra), the Tribunal held likewise on a similar set of facts following Spic (HCD) Ltd., Vs CCE, Channai - ( 2006-TIOL-2016-CESTAT-Mad ) = 2006 (201) ELT 386 (Tri. ). In the case of Spic (HDC) Ltd. (supra), the case of the Revenue was that the job worker was not required to pay duty on repaired/reconditioned capital goods received by them under Rule 57S of the Central Excise Rules, 1944 and consequently the principal manufacturer was not entitled to take CENVAT credit of the duty actually paid by the job worker on the repaired/processed capital goods. Relying on the above case law, the learned Counsel submits that the lower authorities had no jurisdiction to decide on the taxability of the service in question (certification of pollution level). This jurisdiction belonged to the service tax authorities at the service providers end. The service-providers' paid service tax on the said service by filing returns and following the procedure laid down under the service tax rules. Such payments were accepted by the service tax authorities concerned. According to case law, the appellant was entitled to take credit of the service tax so paid by the service providers. Therefore, the appeals are liable to be allowed.

4. The learned SDR submits that the basic issue to be considered in this case is whether certification of pollution level in the appellant's factory premises is an input service under Rule 2 (l) of the CENVAT credit Rules, 2004 for the appellant to claim credit of the service tax paid on such services. It is submitted that, there being no direct nexus between the certification of pollution level and the manufacture of cement, such certification would not qualify to be input service under Rule 2 (l).

5. In his rejoinder, the learned Counsel submits that the issue raised by the learned SDR is beyond the scope of show-cause notice. It is submitted that the department cannot be permitted to raise any issue beyond the scope of the show-cause notice. In this connection, the learned Counsel has relied on CCE Vs. Toyo Engineering India Ltd. - (2006-IST-15-SC-CUS) = 2006 (201) ELT 513 (SC) , wherein it was held, on the facts of that case, that the benefit of project import was not deniable to the assessee inasmuch as it was not a ground mentioned in the show-cause notice. The apex Court held that the department could not be permitted to travel beyond the scope of the show-cause notice.

6. After considering the submission, I am inclined to accept the plea made by the learned Counsel. As rightly submitted by him, the show-cause notices in this case did not allege that the certification of pollution level was not an ‘input service' under Rule 2 (l) of the CENVAT credit Rules, 2004. The show-cause notices proposed to deny the benefit of CENVAT credit to the appellant on the sole ground that the certification of pollution level was not a taxable service and, therefore, the service provider was not legally required to pay service tax thereon and consequently the CENVAT credit of the service tax paid by the service provider was not admissible to the appellant. In this context, the case law cited by the Counsel is apparently applicable. The view taken in the cited cases is that, where service tax or Central Excise duty was paid on any service or any excisable goods, as the case may be, by the service provider or the manufacturer of the goods, as the case may be, CENVAT credit thereof would be admissible to the service recipient or, as the case may be, the manufacturer of the final product who has used the aforesaid goods as inputs in the manufacture of final products. The departmental authorities having jurisdiction over the service recipient/manufacturer of final products cannot sit in judgement over the taxability of the service or excisability of the inputs, which function belongs to the departmental authorities having jurisdiction over the service provider/input manufacturer. This settled position of law is squarely applicable to the present case.

7. It is nobody's case that there is no connection between the manufacture of cement by the appellant and the pollution caused by such activity. Indeed, there is a direct connection between the two. Therefore the proposition made by the learned SDR, which is liable to be rejected as beyond the scope of the show-cause notices, is not acceptable otherwise also.

8. In the result, the impugned orders are set aside and these appeals are allowed.

(Pronounced in Court)

[sukhvinder singh]

my question is diffirent  deparment is demanding the duty on the dispatched  quantity , and dening the service tax credit which is paid as disposed off charge

 

thanks

[Pradeep Khatri]

Since, your material is of Hazarduos nature, therefore, no excise duty will be paid by you and the service tax will be availabe to you on the aforesaid grounds.