ULTRATECH CEMENT LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) IN these appeals filed by the Assesses, 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 the domain of the service tax authorities at the service -providers' end. Some of the decisions cited by the Counsel are the following:

(3.) 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(1) 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(1).