Tribunal reverses denial of cenvat credit on security services & testing charges, rejects cargo handling tax demand

The Tribunal allowed the appellant's appeal, overturning the denial of cenvat credit on security services at the job worker's premises and testing charges by Central Power Research Institute. Additionally, the Tribunal rejected the service tax demand under cargo handling service for unloading transformers at the customer's premises, stating that mere unloading does not qualify as cargo handling service. The appellant provided sufficient evidence to support their credit claims, leading to the Tribunal's decision in favor of the appellant, setting aside the earlier decision.

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Issues:
1. Denial of cenvat credit on service tax paid on security services availed at job worker's premises.
2. Denial of cenvat credit on invoices issued by Central Power Research Institute.
3. Confirmation of service tax demand under the category of cargo handling service for unloading transformers at customer's premises.

Analysis:

Issue 1: Denial of cenvat credit on service tax paid on security services at job worker's premises:
The appellant, engaged in manufacturing transformers, availed cenvat credit of service tax paid on security services at the job worker's premises. The department denied this credit, asserting lack of utilization within the factory of manufacture. However, the Tribunal noted that the service tax was paid to ensure security for goods manufactured on job work basis. Citing precedent (MRF Ltd. Vs CCE Chennai), the Tribunal allowed the cenvat benefit for security services used at the job worker's premises. The appellant provided job work challans and evidence of receiving goods, supporting the credit claim.

Issue 2: Denial of cenvat credit on invoices issued by Central Power Research Institute:
The denial of cenvat credit on testing charges by the authorities was based on the lack of evidence linking the charges to goods manufactured. However, the Tribunal referred to a similar case (Commissioner of Central Excise Nagpur Vs Ultra Tech Cement Ltd.) where credit for services used outside factory premises was allowed. Consequently, the Tribunal held that the credit on testing charges cannot be denied to the appellant.

Issue 3: Confirmation of service tax demand under cargo handling service for unloading transformers at customer's premises:
The department confirmed a service tax demand under cargo handling service for unloading transformers at the customer's premises. The Tribunal observed that the appellant, as a manufacturer of transformers, arranged labor for unloading goods to ensure safe delivery. It was noted that mere unloading of goods at the customer's site, primarily involving sale of goods, does not warrant service tax levy under cargo handling service. Referring to a relevant case (N. Rajshekara & Co. Vs CCE Maysore), the Tribunal emphasized that the demand under cargo handling service was not sustainable as the appellant only arranged for unloading, not both loading and unloading as required by the definition of cargo handling service.

In conclusion, the Tribunal found no merit in the impugned order and allowed the appeal in favor of the appellant, setting aside the earlier decision.

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