Credit taken on service tax paid on Supply of JCB used for cleaning, leveling etc of waste yard, transplanting of old trees etc.

PJ/Case Laws/2011-12/1204

Credit taken on service tax paid on Supply of JCB used for cleaning, leveling etc of waste yard, transplanting of old trees etc. – admissibility of

CASE: - COMMISIONER OF C.EX. SALEM VS ITC LTD

CITATION: -2011(268) E.L.T. 89(TRI.-CHENNAI)

ISSUE: -Credit taken on service tax paid on Supply of JCB used for cleaning, leveling etc of waste yard, transplanting of old trees etc. – admissibility of

BREIF FACT: -Respondent are manufacturer of paper and paper board. They have taken credit of the service tax paid on various services like-Supply of JCB for yard, cleaning and internal road leveling, plastic removal and cleaning of yard, transplantation of old trees and levelling work, JCB chain dozer tractor for waste yard levelling work, JCB tractor & manpower supply for swimming pool cleaning work, plastic removal and cleaning of yard, trench work, supply of tractors, JCB for yard development works, draining works, drain cleaning work, waste yard work, waste yard filling and levelling work, supply of chain dozer for waste yard.

Department issued Show cause notice to the respondent denying credit of service tax so taken. The Original authority denied credit in respect of service tax paid on the above activities. On appeal the Commissioner (Appeal) set aside the order of the original authority.
Hence, Revenue is in appeal before the Tribunal.

APPEALLANT CONTENTION: -Revenue submitted that the above activities are not directly related to manufacture and clearance of final product and the same cannot be also considered to be activities relating to setting up, modernization, renovation and repair of the factory or activities relating to their business as covered by the inclusive definition. Therefore, the order of the Commissioner (Appeal) is required to be set aside and the order of original authority is to be restored.

RESPONDENT CONTENTION: -Respondent submitted that waste paper is one of the main raw material used by them and waste paper yard is a leased area, use of JCB for levelling/filling and cleaning of yard is essential activities, which is integrally connected to receipt and storage and process of raw material Activities like transplantation of the old trees are in connection with expansion of the factory. Most of the activities are directly related to the handling of the raw material and rest of the activities are business activities used within the factory premises in connection with the maintaining cleanliness and approach to different part of the factory and to ensure proper communication. Therefore, the credit was validly taken by them.

REASONING OF JUDGEMENT: - The Tribunal held that the Commissioner (Appeal) had appreciated the fact that the respondent who is manufacture of paper and paper board are handling huge quantity of waste paper and the activities for the upkeep of waste yard, which include laying down roads, levelling, filling up etc are part and parcel of activities having relation to manufacture of excisable activities. It was noted that the Commissioner also took note of the fact that the activities like transplantation of the old trees were in connection with the expansion of factory. Similarly, the Commissioner held that the draining and maintenance of drain and swimming pools are related to the maintenance of effluent plants. In the light of the factual finding, he treated the activities as input service and allowed the credit.

It was held that the department had not adduced any evidence to contradict the factual findings of the Commissioner (Appeals) on the nature of activities and the purpose for which the same were undertaken. The impugned order of the Commissioner (Appeal) required no interference.

JUDGEMENT: -Appeal rejected.

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PJ/Case Laws/2011-12/1204

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