2012 (7) TMI 77 - AT - Service Tax

Tribunal Upholds Commissioner's Decision on Cenvat Credit, Rules in Favor of Appellant on Tippers

The Tribunal upheld the Commissioner's decision to disallow Cenvat credit on certain items but found in favor of the appellant regarding the tippers, ... Cenvat Credit on Capital goods used for providing output services - Waiver of pre-deposit – Cenvat credit demand in respect of MS Angles, Channels, Beams, Joists, HR Sheets, HR Plates - these items had been used for fabrication for various machinery or parts thereof of their crushing plant - Since, the dispute on this point is of facts and the same can be decided only at the time of regular hearing, pre-deposit waived. Regarding Cenvat credit demand in respect of tippers – Held that:- activities as unloading of iron ore lumps at the railway siding, arranging its transportation to the factory and loading of the processed or into the trucks are auxiliary activity and unless the appellant's contract with their clients are mixed contract prescribing separate races for their different activities, their activity would have to be classified as Business Auxiliary Service only and in that event the tipper used by them cannot be treated as capital goods. Directed to make deposit. Issues:Recovery of wrongly taken Cenvat credit on various items and service tax credit based on incomplete documents.Analysis:The appellant operated a plant for crushing and screening iron ore lumps on a job work basis. They charged a consolidated amount for the entire activity, including unloading, transportation, and loading of the processed ore. The Department issued a show cause notice for recovery of wrongly taken Cenvat credit and service tax credit. The Commissioner confirmed the demand and imposed a penalty. The appellant challenged this order.The Commissioner disallowed Cenvat credit on steel items and tippers, stating they were not eligible. The appellant argued that the items were used for fabrication of machinery and part thereof, not for supporting structures. They also contended that tippers were essential for their activity, falling under Cargo Handling Service. The Department opposed the stay application, emphasizing the appellant's registration under Business Auxiliary Service.The Tribunal considered both sides' submissions and records. Regarding the steel items, the dispute was factual, requiring further examination. As for the tippers, the Tribunal found the appellant's activity primarily fell under Business Auxiliary Service, making the tippers ineligible as capital goods. Thus, the Tribunal directed the appellant to deposit a specific amount within a set period, with the waiver of pre-deposit and stay on recovery contingent on compliance.In conclusion, the Tribunal upheld the Commissioner's decision on disallowing Cenvat credit on certain items. However, they found in favor of the appellant regarding the tippers, directing a specific deposit for further proceedings.