TaxTMI 
TaxTMI 
2021 (9) TMI 816
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....TL) registered under the provision of the Companies Act, 1956 with equity contribution from the Group Companies namely Essar Steel Limited, Essar Shipping and Logistics Limited and Essar Shipping Limited, specially to develop the Deep Water Bulk Terminal Facility at Hazira including construction of a 550 meters jetty. 1.3 A license agreement between Gujarat Maritime Board (GMB), M/s EBTL and M/s. Essar Steel Limited for construction and use of 550- meters Deep water jetty (Second Phase Extension of existing captive jetty of Essar Steel Limited) at Hazira in port Magdalla By M/s. EBTL was signed on 25.03.2010 with condition that the ownership of deep water captive jetty shall vest in Gujarat Maritime Board (GMB) and the licensee shall have no right, title, interest or other proprietary right in respect of such structure or in respect of the land on which such structure is constructed (it being specifically understood that water front is the sovereign right of the Government). For the purpose of setting up of captive jetty, Gujarat Maritime Board (GMB) vide letter No. GMB/N/PVT/ESSAR/472/ll/147-2395 dated 14.05.2007 issued a No Objection Certificate (NOC) to M/s. EBIL for dredging o....
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....does not falls under the purview of input service under Rule 2 (l) of the Cenvat Credit Rules, 2004 as amended. 1.4 Due to aforesaid contention of the revenue a show cause notice dated 13.04.2015 was issued wherein it was proposed to deny the Cenvat credit n the dredging service and also demanded interest under Rule 14 of Cenvat Credit Rules, 2004 and proposed penalty under rule 15 of Cenvat credit Rules, 2004 read with 78 of the Finance Act. The Adjudicating authority i.e. Commissioner of Central Excise and Service tax, Surat-II vide order dated 03.11.2015 confirming the demand of cenvat credit order to recover interest and imposed amount of penalty. Therefore, the present appeal. 2. Shri Vipin Jain, Learned Counsel along with Ms Dimple Gohil, Ms Isha Shah, Shri Vishal Agarwal & Shri Alice, Advocates appeared on behalf of the appellant. Shri Jain submits that the dredging services was availed by the appellant are integral to providing the output services i.e. Deep Draft cargo handling services for the ships calling at the appellant's jetty. Without the dredging services having been availed for the channel, the appellant would not be able to provide its Output Services. He submit....
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....04 that for being eligible to avail cenvat credit of an input service, the property on which the services have been availed of must be owned by the service recipient. It is his submission that even if the one was to assume for the sake of argument that the benefit of dredging services was not entirely accrue to the appellant as the channel could have been denied as it is nobody's case that any extra input service was availed to confer any benefit to a third party. The entirety of the input services was used only for providing the taxable output services of the appellant. It is not permissible to have provided the taxable output services of the appellant. It was not possible to have provided the taxable output services by using a lesser quantum of input services in question. Therefore, the ration laid down by the Hon'ble High court of Gujarat in the case of CCE vs Sterling Gelatin 2011(270) ELT 200 is applicable. Further in any event there was also no mechanism prescribed in law to reverse/apportion the credit in such a situation. He placed reliance in this regard on the decision of Hon'ble Apex Court in the case of CIT vs. B.C Srinivasa Setty (128 ITR 294) wherein it was held that ....
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....s not vest with it and is to remain the property of the GMB. He submits that the CCR, 2004 do not require ownership of an asset to be a necessary condition for availment of credit. In fact Rule 4(3) of CCR, 2004 specifically provides that the cenvat credit in respect of capital goods shall be allowed even if the capital goods are acquired on lease, hire purchase or loan agreements from financing companies. Title of the property is not relevant for the purpose of availment of credit as has been held by the Hon'ble Tribunal in the case of CCE vs JSW Ispat Steel Ltd- 2015 (327) ELT (549), following the judgment of the Punjab & Haryana High Court in the case of the Pepsi Foods Ltd 2010(254) ELT (284). 2.4 He submits that even though the channel may be the property of GMB, as long as the appellant had the license / permission to use the same it was entitled to avail credit of all input services used for rendition of its output service. He submits that once there is no dispute regarding use of the service in rendition of output service, the credit of service tax paid cannot be denied, especially when the service tax paid is duly reflected in the invoices which are in the name and addres....
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.... limited issue involved in the present case is that whether the appellant operating the port/jetty is entitled for cenvat credit in respect of dredging service against the provision of output service viz. port services and cargo handling services. We find that the Adjudicating Authority has denied the cenvat credit on the following counts: 1) Dredging services has no nexus with the output services i.e. Port service and Cargo handling services. 2) Since navigation channel for which dredging service was availed is not a private property of EBTL as per the agreement between EBTL, GMB and Essar Steel. 3) The dredging activity i.e. reclamation was done by EBTL on behalf of GMB for common users. Therefore, dredging service cannot be considered as input service for the appellant. 4.1 As regard the issue that whether the dredging services has nexus with the output service namely port service and cargo handling service, we find that dredging service availed by the appellant is integral to providing output services for ships to come at the appellant's jetty, without availing the dredging service the appellant could not be able to provide the output service of cargo handling. The dredging....
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....d. So, the findings of the adjudicating authority on this issue, is not sustainable." * Sanghi Industries vs. CCE 2020- TIOL-328- CESTAT -AHM "6.6 In respect of dredging services we find that the same was in respect of jetty in the factory premises and is used for transportation as well as import and export of goods. Since the services are related with the business of the company, the appellant are eligible to avail credit of the same . As regard denial of credit on excess tax charged by the service provider, we find that the assessment at the end of the service provider has not been challenged. The appellant has paid the amount of service tax charged to them. In such case, the credit cannot be denied to them. We thus are of the view that the appellant are eligible for availing cenvat credit on impugned services, Resultantly we allow all the appeals filed by M/s Sanghi Industries Ltd in the above terms with consequential relied if any." In view of the above judgments it is clear that the dredging services used for providing the port service/Cargo handling service is admissible as input service. 4.3 As regard the ground for denial of cenvat that the Navigation channel for whic....
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....nt of cenvat credit or otherwise the courts has passed various judgments. Some of the judgments are reproduced below: * CCE vs JSW Ispat Steel Ltd- 2015 (327) ELT (549) "5.2 In the decisions relied upon by the appellant, the issues contested by the Revenue have been adequately addressed. For example, in the case of Pepsi Foods (supra), it has been held that ownership of goods is not a criterion for denial of credit on capital goods and even if it is leased for a particular period, the assessee is eligible to take Cenvat credit. In the present case, merely because M/s. Inox Air Products Ltd. has leased out the plant to the appellant, that does not disentitle the appellant from availing Cenvat credit of the excise duty paid on capital goods. Similarly, in the case of Gujarat Ambuja Cement Ltd. (supra), Rajarambapu Patil SSK Ltd. (supra) and KCP Ltd. (supra), this Tribunal and the Hon'ble High Court of Himachal Pradesh held that Cenvat credit of excise duty paid on parts, components and accessories would be admissible under the Capital Goods Credit scheme even if they are assembled into goods which are immovable or exempted. Similarly, in the ICL Sugars Ltd. (supra), it was held t....
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....rging service tax on the output services. For cenvat credit as well as for charging service tax the only criteria is that there should be service provider and service recipient irrespective of ownership of the premises from where the service is provided. It is very common in commercial parlance that the service provider takes the premises on lease which is owned by the leasor. However, irrespective of services received related to such premises or not but the credit cannot be denied on the service received by the service provider in respect of the leased premises for a simple reason such that such leased premises is used by the service provider for providing the output service. The only condition is that in respect of input service the relationship between the service provider and input service recipient is that of service provider and the service recipient. The payment of any service including the service tax is charged by the service provider and the same is borne by the input service recipient. In the present case also as regard the service provision of dredging service there is a direct contract between the service provider viz M/s Van Oard Dredging and Marine Contractor and M/s....
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....pt the appellant. Accordingly, the case of the revenue is not sustained on this count also. 4.6 The very same issue has been considered by this tribunal in the case of Saurashtra Cement Ltd 2018-TIOL-2749 CESTAT -AHD wherein the cenvat credit was allowed even though the private jetty does not belong to the assessee and consequently it was used by other jetty owners also. The tribunal after considering various judgments given the following order: "On careful consideration of the submissions made by both the sides and perusal of the records, I find that the Jetty is a captive active jetty of the appellant, which is exclusively used by the appellant only. At time, the appellant have to get the dredging done at the jetty for proper function of jetty to improve the draft. Since jetty is used primarily for import of coal which is used in the manufacture of final product, Dredging Service is qualified as input service. It is also a fact that dredging service is nothing to do with the customer to whom final product is sold. The service charge of dredging service is borne by the appellant obly which stands absorbed in the overall coszt of manufacturing of cement. Therefore, it cannot be ....