Appeal Granted: CENVAT Credit for Dredging Service on Jetty for Coal Import in Cement Production

The Member (Judicial) allowed the appeal, setting aside the denial of CENVAT credit on Dredging Service used for a Jetty outside the registered premises. The Jetty was considered a captive facility crucial for coal import in cement production, making Dredging for Jetty maintenance an eligible input service. The service cost was deemed qualified for CENVAT credit regardless of its location, as long as it related to final product manufacturing, following the precedent of the Bombay High Court.

---

---

Issues:
- Denial of CENVAT credit on Dredging Service used for Jetty outside registered premises.

Analysis:
The appellant, engaged in cement manufacturing, developed a Jetty at Porbandar for coal transportation, availing Dredging service for Jetty efficiency. The department contended that since Dredging was outside registered premises and not used for manufacturing or goods removal, it did not qualify as an input service. The Ld. Commissioner (Appeals) upheld this denial.

Appellant's Argument:
The appellant's counsel argued that the Jetty was solely used for coal import, essential for cement manufacturing, and for final product removal, including transfers and sales. He cited various judgments to support the admissibility of CENVAT credit on Dredging services for the Jetty.

Revenue's Argument:
The Revenue's representative reiterated the impugned order, emphasizing that Dredging outside the factory and for goods removal did not meet the Rule 2(l) definition of input service for CENVAT credit. Supporting judgments were presented.

Judgment:
After considering both sides' submissions and records, the Member (Judicial) found the Jetty to be a captive facility exclusively used by the appellant for coal import crucial to cement production. Dredging for Jetty maintenance to enhance functionality was deemed an input service, not linked to final product removal. The service cost, absorbed in manufacturing, qualified for CENVAT credit per the Bombay High Court's precedent. The location of service availing, whether inside or outside the factory, was deemed irrelevant as long as it related to final product manufacturing. Consequently, the impugned order was set aside, and the appeal was allowed.

---