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2020 (2) TMI 1441 - AT - Service TaxNon-payment of service tax - storage & warehousing service - wrongly utilized Cenvat credit of input services consumed in exempted output services for payment of service tax on dutiable output services - demand of interest and penalty. Demand of service tax under the head ‘Storage and Warehousing Services’ - HELD THAT:- There are no force in the argument of the Ld. Counsel that Soya Bean Meal is an agricultural produce. It is true that soya bean is an agricultural produce but once the soya beans reach the oil mill, they extract soya oil and what is left over is the soya bean meal. Soya oil and soya bean meal are two products of the oil extraction industry. It cannot be said that soya bean meal is an agricultural produce just as a cotton fabric or a cotton garment cannot be called as an agricultural produce simply by virtue of the fact that cotton which is the initial raw material was a crop. Similarly, articles of steel or even refrigerators etc. are made up with metal which had originally come out as a product of mining of the ore. For that reason, all these cars, washing machines, refrigerators etc. do not become products of mining. Otherwise, everything that we use must be classified as a product of agriculture or mining or forests which is absurd. What is relevant is that activity which produces the goods in question which in this case is the oil mill. As far as the payment in question is concerned, the demand is on the entire amount which the appellant has received under the agreements - the appellant is also getting paid a separate amount for storage in their godown from their clients apart from the amounts which they receive for the stevedoring services. This is confined to cargo stored beyond a certain period. Undoubtedly, such service is in the nature of storage and warehousing service and is chargeable to service tax as such. In our considered view, the demand on the appellant has to be restricted to the extent the amounts which they have received towards godown rents separately for storage over and above the normal stevedoring charges. The appellant is not liable to pay service tax under “Storage & Warehousing Services” on the service charges which they have received for stevedoring/cargo handling - They are liable to pay service tax on storage and warehousing charges of any amount received on account of storage of goods by warehousing charges ground rent or any type of rent, etc. - appellant is liable to pay interest as applicable. Recovery of Cenvat credit wrongly utilized - HELD THAT:- It is found that Rule 6(3)(c) as it stood during the relevant period prohibited utilization of Cenvat credit in excess of 20% but did not forbid availment of Cenvat credit. After 1-4-2008, when Rule 6(3)(c) was amended, the accumulated Cenvat credit did not lapse as there was no provision to that effect in the amended rules. Nothing stopped the appellant from utilizing the Cenvat credit post 1-4-2008. Therefore, the appellants have utilized Cenvat credit to the extent of 80% well before they were entitled to do so. At this point of time, since more than a decade has passed, post 1-4-2008, it does not make any difference whether they had utilized the Cenvat credit to the extent of 80% prior to 1-4-2008 or post this date - the demand on this accounts needs to be dropped. All penalties are set aside. Appeal allowed in part.
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