2014 (7) TMI 709 - AT - Service Tax

Tribunal remands case for service classification review, demands payment for CENVAT credit.

Sri Krishna Engineering & Construction Co. Versus Commissioner of Central Excise, Customs and Service Tax Visakhapatnam-I

Sri Krishna Engineering & Construction Co. Versus Commissioner of Central Excise, Customs and Service Tax Visakhapatnam-I - TMI Issues Involved:1. Classification of services rendered by the appellant as Cargo Handling Services.2. Demand under Business Auxiliary Service.3. CENVAT credit on capital goods and depreciation under the IT Act.4. Premature credit on wire ropes, gears, and tools.5. Service tax credit on bank charges and telephone service.6. Demand related to non-maintenance of separate accounts for traded goods.Issue-wise Detailed Analysis:1. Classification of services rendered by the appellant as Cargo Handling Services:The primary issue was whether the services rendered by the appellant could be classified as Cargo Handling Services. The Tribunal noted that the work order issued to the appellant was similar to one previously considered in the case of M/s. Srinivasa Transports. In that case, the Tribunal had remanded the matter for fresh decision. The Tribunal observed that the activities undertaken by the appellant, such as internal handling, material handling, transportation, and crane supply, were considered Cargo Handling Services in the impugned order. However, the Tribunal found that the exact nature of the work and its classification under Cargo Handling Services were not clearly established in the impugned order. Therefore, the Tribunal decided to remand the matter for a detailed appreciation of facts and a fresh decision.2. Demand under Business Auxiliary Service:The second demand was for Rs. 1,69,160/- under Business Auxiliary Service. The appellant had already deposited Rs. 1,28,426/- with interest, which had been appropriated. The Tribunal decided not to discuss this issue in detail at this juncture, considering the decision to remand the matter and the fact that the amount had been deposited.3. CENVAT credit on capital goods and depreciation under the IT Act:An amount of Rs. 9,64,674/- was demanded on the ground that the appellant had availed CENVAT credit on capital goods and claimed depreciation under Section 32 of the IT Act, 1961. The appellant claimed to have filed a revised return. However, the Tribunal noted that the appellant could not provide clear evidence of filing the revised return. Therefore, the Tribunal directed the appellant to deposit this amount even if the matter was to be remanded for de novo adjudication.4. Premature credit on wire ropes, gears, and tools:An amount of Rs. 60,840/- was demanded as the credit on wire ropes, gears, and tools was taken prematurely. The learned counsel agreed that only interest was required to be paid, which the Tribunal found reasonable.5. Service tax credit on bank charges and telephone service:Service tax credit of Rs. 20,685/- was denied on the ground that credit of service tax paid towards bank charges and telephone service was not admissible. Since the entire amount with interest had been paid, the Tribunal did not consider it necessary to go into this issue.6. Demand related to non-maintenance of separate accounts for traded goods:An amount of Rs. 46,34,224/- was demanded on the ground that the appellant did not maintain separate accounts for taking credit on bank charges and telephone bills. The Tribunal found that the Commissioner's conclusion was not supported by the decision in the case of M/s. Orion Appliances Ltd., which held that trading could not be considered a service. Therefore, the Tribunal concluded that the demand could not be sustained.Conclusion:The Tribunal directed the appellant to deposit an amount of Rs. 10,00,000/- within 8 weeks and report compliance to the Commissioner. The Commissioner was directed to adjudicate the matter after noting compliance with the pre-deposit and observing principles of natural justice. If the appellant failed to make the deposit, the impugned order would come into force, and the appeal would be considered rejected. If the deposit was made, the Commissioner was to proceed with adjudication in accordance with the law.