Case Law Details
Maharashtra Enviro Power Ltd. Vs. Commissioner of Central Excise (CESTAT Mumbai)
The issue under consideration is whether denial of CENVAT credit availed by the appellant for construction/setting up of landfill is justified in law?
CESTAT states that, going by the language of para 3 of the show-cause notice one thing is clear that setting of landfill is a mandatory requirement of the guidelines set by the State Pollution Control Board and the said construction was made for storage and disposal of Hazardous Waste which can be equated with construction of immovable property but not other than plant and machinery as found in the definition of works contract services. Further, it is difficult to arrive at a definite conclusion if the said setting up of a landfill is civil structure or not, in view of the fact that civil structure has to be a structure of a permanent nature and the life of landfill ends after the same gets fill up, as has been reflected in para 9 of the show-cause notice. It is apparently therefore held by the Commissioner (Appeals-I) Central Tax, Pune in the appellant’s own case for the subsequent period that landfill created by digging out the land to be used for waste management cannot be treated as civil structure, since it was done in a scientific process to ensure that toxic waste is managed effectively. Be that as it may, even by going through the definition contained in Rule 2(l) of CENVAT Credit Rules, 2004 dealing with exclusion clause, service portion in the execution of a works contract and construction service including services listed under clause B of Section 67E of the Finance Act excluding all other specified services therein are only excluded from the definition of ‘inputs service’ and not the whole portion of work including raw material used etc. However, in the demand raised against the appellant, every expenditure concerning setting up of the landfill and tax paid there on was taken into consideration to deny the credits on the entire amount. It is, noteworthy, to mention here that in the show-cause, demand was made, as it appeared to the respondent department, that the inputs credits were outside of the definition and more interestingly Learned Commissioner (Appeals) who confirmed the demand had candidly admitted that he was not sure about precise or legal definition of the term ‘civil structure’ which has taken the demand to a doubtful proposition. Having regard to the fact that only service portion of the civil structure is disallowed for CENVAT credit and the landfill setup had a very limited life span that help in storage and disposal of Hazardous Waste and setting up of such landfill is a mandatory requirement in waste management as per guidelines of the State Pollution Control Board, CESTAT have no hesitation to hold a finding that credit taken by the appellant in setting up of such landfills are admissible credits.
FULL TEXT OF THE CESTAT JUDGEMENT
Denial of CENVAT credit to the appellant for construction of landfill in setting up of Common Hazardous Waste Treatment, Storage and Disposal Facility on Build, Own and Operate basis on the ground that the same is a works contract service involving civil construction that was covered under the exclusion clause of the definition of ‘input services’ under Rule 2(l)(A)(a) of the CENVAT Credit Rules, 2004 is assailed by the appellant in these two appeals.
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