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2021 (9) TMI 816 - AT - Service TaxCenvat Credit - input services or not - dredging services - nexus with the output services i.e. Port service and Cargo handling services or not - navigation channel for which dredging service was availed is not a private property of EBTL as per the agreement between EBTL, GMB and Essar Steel - whether the appellant operating the port/jetty is entitled for cenvat credit in respect of dredging service against the provision of output service viz. port services and cargo handling services? Whether the dredging services has nexus with the output service namely port service and cargo handling service or not - HELD THAT:- The dredging service availed by the appellant is integral to providing output services for ships to come at the appellant’s jetty, without availing the dredging service the appellant could not be able to provide the output service of cargo handling. The dredging service was availed exclusively for the purpose of making channel at port Magdalla which was very shallow and as a consequence of mother vessels which required a higher deep draft could not have reached the said port - there is absolutely no doubt that the dredging of channel was therefore essential for enabling the appellant to provide the port services expected by its customer Essar steel. Therefore, the dredging service has direct nexus with the output services of port services and cargo handling services - the dredging services used for providing the port service/Cargo handling service is admissible as input service. CENVAT Credit - Navigation channel for which dredging was availed - private property or not - HELD THAT:- The sea coast parcel on which construction of the port is allowed is always on lease basis and not on the ownership basis however, the operation of port is carried out by the port operator. It is also undisputed position that the entire port operation on the port including the Port service and cargo handling service are liable to payment of service tax on the said output service. Therefore, any service is availed in relation to the operation of port or construction of port is indeed the input service. Accordingly, the assessee is entitled for cenvat credit in respect of such input service i.e. dredging service used for providing output service i.e. Port Service. It also not disputed that the entire service charges along with service tax there on for dredging of navigation channel was paid by the appellant to the aforesaid contractors who carried out the dredging services. In this undisputed fact the appellant is the service recipient for dredging service which is undisputedly used for providing Port Services and cargo handling services, hence, the appellant is entitled for taking cenvat credit on dredging services. Allegation of the department that the navigation channel is meant for other users - HELD THAT:- The credit is not admissible to the appellant, firstly, the entire contract of dredging of navigation channel is between the service provider i.e. M/s Van Oard Dredging and Marine Contractor and M/s Van Oard India Pvt. Ltd and the appellant. The entire service charge along with service tax was borne by the appellant no other persons are involved in the transaction of said services. Therefore, the appellant only is the sole recipient of the services. Accordingly, the appellant is entitled for the entire cenvat credit - In this position even though there is a condition in the agreement with GMB to allow the navigation channel to others but practically the said channel cannot be used by others. Moreover, the revenue has not adduced a single incident of the said navigation channel being used by any other persons. Therefore, even though the condition for allowing the navigation channel to other as per the agreement but in fact there is no user of said navigation channel except the appellant. Accordingly, the case of the revenue is not sustained on this count also. The very same issue has been considered by this tribunal in the case of SAURASHTRA CEMENT LIMITED VERSUS C.C.E. & S.T. - BHAVNAGAR [2018 (8) TMI 460 - CESTAT AHMEDABAD] wherein the cenvat credit was allowed even though the private jetty does not belong to the assessee and consequently it was used by other jetty owners also. Extended period of limitation - HELD THAT:- All the information regarding dredging service availed by the appellant, Cenvat credit availed there on etc were in the knowledge of the department therefore there is no suppression of fact or mis declaration with intent to evade duty on the part of the appellant. From the Show cause Notice it was observed that the appellant had availed Cenvat credit on dredging services from 19.04.2010 to 1.12.2012 whereas the Show Cause Notice denying the said Cenvat credit was issued on 13.04.2015. Therefore, the entire demand is under the extended period, hence in view of the above facts the demand is not sustainable on limitation also. The demand of cenvat credit is not sustainable on merit as well as on limitation - Appeal allowed - decided in favor of appellant.
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