2010 (6) TMI 464 - AT - Service Tax

Demand - Port services - Disallowance of Cenvat credit - Held that Cenvat credit taken in respect of the service tax paid on insurance charges taken for the individual employees who are working within the port area. allowed. 100% credit on Capital Goods - demand and penalty set aside but interest confirmed. Terminal charges/port charges retained by the appellant from out of the sale proceed of auction of goods that were not cleared by the importers - the auctioning of the goods not cleared by the importer is not a port service rendered by the importer and hence cannot be subjected to any service tax. Pre stage operations - appellant had created infrastructure facility for examination of the cargo by the customs authorities, before it enters into port area. - charges which are collected are in the nature of fees for making available the infrastructure to the exporters - these charges collected at the pre-stage yard for the examination of the goods by the customs authorities would not get covered under the category of port services. Sharing of Income - Since the amount which has been received by the appellant is an amount on which service tax liability has already been discharged by M/s. CONCOR, the said amount cannot be held to be taxable under the category of port services in the appellant s hand Cenvat Credit on banking services - amount of ST debited by bank - Since the documents were not produced and not explained before the adjudicating authority - the adjudicating authority to reconsider this issue afresh after following the principles of natural justice and come to a conclusion.

Issues Involved:
1. Disallowance of Cenvat credit on improper documents.
2. Disallowance of credit taken in respect of insurance charges.
3. Reversal of Cenvat credit availed on capital goods and spares.
4. Service tax demands not challenged by the appellant.
5. Service tax on auction proceeds of unclaimed cargo.
6. Service tax on charges for infrastructure for customs examination.
7. Service tax on amounts received from Container Corporation of India (CONCOR).

Issue-wise Detailed Analysis:

1. Disallowance of Cenvat Credit on Improper Documents:
The appellant contended that although the documents were not as prescribed under Rule 9 of Cenvat Credit Rules, 2004, they contained sufficient details for verification of payment and receipt of services. The Tribunal remanded the matter to the adjudicating authority for fresh consideration, emphasizing the need for verification of the documents in question.

2. Disallowance of Credit Taken in Respect of Insurance Charges:
The appellant argued that the insurance charges were for insuring goods and employees within the port area. The Tribunal, referencing the decision in Stanzen Toyotetsu India Pvt. Ltd. v. CCE, Bangalore, ruled in favor of the appellant, setting aside the demand, penalties, and interest on this count.

3. Reversal of Cenvat Credit Availed on Capital Goods and Spares:
The appellant had availed 100% credit on capital goods in the year of receipt, contrary to the rule allowing only 50% in the first year. The Tribunal acknowledged the eligibility of the appellant for the remaining 50% credit in the subsequent year, thus setting aside the demand but held the appellant liable for interest on the utilized credit.

4. Service Tax Demands Not Challenged by the Appellant:
The appellant did not challenge the service tax amounts of Rs. 20,72,665/- + Edu. Cess Rs. 41,453/-, Rs. 27,61,934/- + Edu. Cess Rs. 55,239/-, and Rs. 1048/- on hotel bills. The Tribunal upheld the impugned order for these amounts and imposed interest. However, penalties under Section 78 were set aside, invoking Section 80 of the Finance Act, 1994, due to the potential relief under the Indian National Shipowners Association v. UOI & Others judgment.

5. Service Tax on Auction Proceeds of Unclaimed Cargo:
The Tribunal concluded that auctioning unclaimed cargo is not a port service rendered to importers and thus cannot be subjected to service tax. The demand, interest, and penalties on this count were set aside.

6. Service Tax on Charges for Infrastructure for Customs Examination:
The charges collected for providing infrastructure for customs examination were deemed not to fall under port services. The Tribunal set aside the demand, interest, and penalties, noting that these charges were unrelated to the actual provision of port services.

7. Service Tax on Amounts Received from Container Corporation of India (CONCOR):
The Tribunal found that CONCOR had already discharged the service tax on the amounts shared with the appellant. Citing the decisions in Popular Automobiles and Cochin International Airport Ltd., the Tribunal ruled that the amounts received by the appellant were not taxable under port services, setting aside the demand, penalties, and interest.

Conclusion:
The appeal was disposed of with the Tribunal providing detailed rulings on each issue, remanding the matter of Cenvat credit on improper documents for fresh consideration, and setting aside demands, interest, and penalties on several counts while upholding others.

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