TMI Blog2023 (10) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity in the appellant s factory. Even though the services do not contribute directly in the manufacture but being necessary to run the factory in relation to the manufacture indirectly. As per the definition of input service if the services is used in or in relation to manufacture and whether directly or in directly, the same is qualified as input service. The court and Tribunal in various judgments held the services related to pollution control as input services and credit was allowed even though such services are not directly used in the manufacture of final product. It is settled that the services which are in relation to pollution control of the factory, the same are input services in terms of Rule 2 (l) of Cenvat Credit Rules, 2004 and hence, eligible for cenvat credit. Whether the services received prior to acquisition of the factory and commencement of manufacture? - HELD THAT:- The services related to pollution control are in relation to the production in the factory, therefore, the time of receipt of service is immaterial so long it is undisputed that the services were used in pollution control which in turn necessary for running the production activity in the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion, fraud etc. cannot by attributed on the appellant. Therefore, the demand for the extended period will not be sustainable. However, if there is any demand within a normal period in respect of waste and scrap of capital goods, the same need to be worked out and recovered by the department. Penalty - HELD THAT:- Since there is no malafide attributed on the part of the appellant and extended period is not invokable, the penalty is not sustainable. Moreover, the major demand was set aside on merit. Corresponding to the said demand also no penalty can be imposed. The impugned order is modified - Appeal allowed. - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. C.L MAHAR, MEMBER (TECHNICAL) Shri J.C Patel Shri Rahul Gajera, Advocates for the Appellant Shri Tara Prakash, Deputy Commissioner (AR) for the Respondent ORDER In this appeal the following issues are involved:- 1. The principal issue in the present appeal is whether the services of environmental due diligence audit of the factory site for investigation of soil and ground water contamination and services of consequential remedial action qualify as input services within the meaning of Rule 2 (l) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2013. In the show cause notice dated 08.06.2011. it was also proposed to deny the cenvat credit of Rs. 3,61,594/- paid on inputs such as TMT Bars, Steel Support Structure, Joists, Beams, Angles, Channels, and MS Angles etc. on the ground that same neither be considered as capital goods nor inputs. A demand for duty of Rs. 6,38,766/- on wasrte Scrap of Capital goods was also proposed. Both the show cause notices were adjudicated vide orders dated 20.02.2013 and 20.03.2014 whereby the demand proposed in the show cause notices were confirmed therefore, the present appeals. 2. Shri J. C patel learned counsel along with Shri Rahul Gajera appearing on behalf of the Appellant submits that the services of Environmental due diligence Audit the investigation of presence and extent of soil and ground water contamination and suggesting and carrying out remedial measures to comply with pollution control laws are clearly in relation to manufacture of final product and therefore eligible for cenvat credit as input service. He submits that the service is clearly covered under the meaning of input service given in Rule 2 (l) of CCR, 2004. He submits that these services are essential to comply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction value. He submits that the Adjudicating Authority neither in the show cause notice nor in the adjudication order decided the classification of the waste and scrap under relevant tariff heading therefore, before deciding the classification demand cannot be made. He placed reliance on the following judgments:- Shriram Alkali and Chemicals vs. CCE 2010 (259) ELT 77 Shree Khedut Sahakari Khand Udhyog Mandli Ltd vs. CCE 2018 (1) TMI 410 Shree Khedut Sahakari Khand Udhyog Mandli Ltd vs. CCE 2017 (11) TMI 1000 2.4 On the issue of limitation, learned counsel submits that in both the show cause notices larger period of demand was invoked. He submits that in the present case there was no fraud, collusion, or any mis-statement or suppression of facts or contravention with intent to evade payment of duty on the part of the appellant. The issue involved are of legal interpretation of the provisions of the Cenvat Credit Rules, 2004 and the Appellant had acted according to the bona fide views held by the appellant, which are also the views taken in the judgments cited herein above. That apart, well before the issuance of the show cause notice, the department had fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion activity in the appellant s factory. Even though the services do not contribute directly in the manufacture but being necessary to run the factory in relation to the manufacture indirectly. As per the definition of input service if the services is used in or in relation to manufacture and whether directly or in directly, the same is qualified as input service. The court and Tribunal in various judgments held the services related to pollution control as input services and credit was allowed even though such services are not directly used in the manufacture of final product. Some of the judgments and observation therein are cited below:- a) Sujal Dye Chem Industries v CCE-2012 (284) ELT 73 In this case the Appellant received service of audit of their process of manufacture and raw materials so as to bring about a change in the same and phase out use of materials which cause depletion of ozone in the atmosphere so as to comply with Ozone Depleting Substances (Regulation Control) Rules, 2000. The Tribunal held that the obtaining of the service for preparation of such audit report was an input service since the whole activity has a direct nexus with the manufacture a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for pollution control as per Kyoto Protocol is an input service. 4.2 From the above judgments it is settled that the services which are in relation to pollution control of the factory, the same are input services in terms of Rule 2 (l) of Cenvat Credit Rules, 2004 and hence, eligible for cenvat credit. 4.3 As regard the issue that whether the services received prior to acquisition of the factory and commencement of manufacture, we find that as discussed above the services related to pollution control are in relation to the production in the factory, therefore, the time of receipt of service is immaterial so long it is undisputed that the services were used in pollution control which in turn necessary for running the production activity in the appellant s factory. Therefore, even if the services were received prior to acquisition of the factory, the fact remains the services were received by the appellant only and the invoices therefore were also issued in favour of the appellant. Hence, the receipt of services by the appellant is not under dispute and it is also not under dispute that the services even though received prior to acquisition and commencement of the factory th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the production. 4.4 As regard the issue regarding admissibility of cenvat credit on various steel items such as TMT Bars, Steel Support Structure, Joists, Beams, Angles, Channels, and MS Angles etc we find that the learned Commissioner denied the cevat credit on the aforesaid goods relying on the decision of the Larger Bench of the Tribunal in the case of Vandana Global Ltd (Supra). However subsequently to the impugned order passed, the Hon ble High Court of Chhattisgarh in Vandana Global Ltd - 2018 (16) GSTL 462 reversed the larger bench judgment of CESTAT in case of Vandana Global Ltd. Moreover this issue has ben considered in the case of CCE vs. Singhal Enterprises P. Ltd - 2018 (359) ELT 313 and Manglam Cement Ltd vs. CEC 2018 (360) ELT 737( LB) as cited by the learned counsel. Therefore, in light of the Hon ble Chhattisgarh High Court judgment and subsequent judgments the appellant is entitled for the cenvat credit on the aforesaid goods. 4.5 As regard the demand of duty on clearance of waste and scrap of the capital goods, we find that the Adjudicating Authority has demanded the duty on the clearance of waste and scrap of the capital goods which is clearly provided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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