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Issues involved: Determination of demurrage charges for export cargo, utilization of more than 20% of Cenvat credit for service tax payment, imposition of penalty.
Issue 1: Demurrage charges for export cargo The Appellant, operating a Container Freight Station, collected demurrage charges for export cargo lying beyond 7 days. The Appellant paid the entire amount of service tax on storage and warehousing charges for the said cargo before proceedings were initiated. The penalty imposed by the Commissioner (Appeals) was challenged by the Appellant. The Tribunal noted that the export cargo beyond 7 days was treated as storage and warehousing service by the Appellant. While there was no clarity on this issue, the Tribunal acknowledged the Appellant's bonafide belief that service tax need not be paid on such cargo. The Tribunal invoked Section 80 of the Finance Act for waiver of penalty due to reasonable cause for non-payment of service tax in this scenario. Issue 2: Utilization of Cenvat credit Regarding the utilization of more than 20% of Cenvat credit for service tax payment, the Tribunal found that it was not a case of duty evasion. The ST3 returns filed by the Appellant could determine if the 20% limit was exceeded. The Commissioner viewed the utilization as a technical error, and since there was no appeal by the Revenue against this observation, it was considered a technical error. Consequently, a nominal penalty of &8377; 10,000 was deemed appropriate for exceeding the Cenvat credit utilization limit. The penalty imposed on the Appellant was reduced to this amount. The appeal was decided in favor of the Appellant on these grounds.
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