2022 (8) TMI 1391 - AT - Central Excise

CENVAT Credit - input services - dredging services received by the appellant for dredging the navigation channel leading to its jetty - lower authorities have denied the cenvat credit in respect of dredging service to the appellant on the ground that the land of jetty is owned by GMB, the channel developed by the EBTL is not for their exclusive use by the appellant - HELD THAT - This tribunal in ESSAR BULK TERMINAL LIMITED VERSUS C.C.E. S.T. -SURAT-I 2021 (9) TMI 816 - CESTAT AHMEDABAD in the appellant s own case on these issues which are involved in the present case also and by giving a detail finding, relying on some judgments held that the dredging service received by the appellant for construction of navigation channel is an input service and the credit was allowed. From the above judgment, it is seen that the entire fact and the legal position of the present case is exactly same as was in the above cited decision of this tribunal. The only difference is, in the present case the show cause notice are periodical whereas, the allegation and contents of the show cause notice are common. As regards submission of the appellant that the cost of service was borne by the appellant only hence credit is available to them, it is found that it is undisputed fact that the entire cost charged by the service provider to the appellant only and the same was expenditure exclusively of the appellant. For this reason also as held by the Hon ble Bombay High Court in M/S. COCA COLA INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, PUNE-III 2009 (8) TMI 50 - BOMBAY HIGH COURT , the appellant is entitled for cenvat credit on input service, dredging service. Appeal allowed.

Summary

Issues involved:
Whether the dredging services received by the appellant for dredging the navigation channel leading to its jetty, on which cenvat credit has been availed, falls under the purview of input service under Rule 2(l) of Cenvat Credit Rules, 2004.

Detailed Analysis:

Issue 1: Dredging services as input service under Cenvat Credit Rules
The appellant argued that the dredging services were essential for providing output services like port services and cargo handling, as without the dredging, the jetty would not be accessible for ships. They cited previous judgments to support their claim. The tribunal agreed, emphasizing the direct nexus between the dredging service and the output services provided by the appellant. It was established that the dredging service was exclusively used to create a sufficient draft for mother vessels to access the jetty, enabling the provision of port services. The tribunal clarified that ownership of the location where the service is provided is irrelevant for availing cenvat credit on input services. The judgment highlighted that the appellant was the sole recipient of the dredging service, which was used for providing port services and cargo handling services, making them entitled to cenvat credit.

Issue 2: Ownership of the jetty and availability of cenvat credit
The revenue contended that since the jetty was not owned by the appellant, cenvat credit for dredging services should be denied. However, the tribunal clarified that ownership of the location where the service is provided does not impact the eligibility for cenvat credit. It was emphasized that the appellant, as the service recipient, had paid for the dredging service and was using it for providing output services. The judgment highlighted that the entire cost of the service was borne by the appellant, making them entitled to cenvat credit as per legal precedent.

Conclusion:
The tribunal set aside the impugned orders, allowing the appeals and granting consequential relief. The judgment reiterated that ownership of the location where the service is provided does not affect the eligibility for cenvat credit, emphasizing the relationship between the service provider and recipient. The decision was based on established legal principles and previous judgments, affirming the appellant's entitlement to cenvat credit for the dredging services used in providing port services and cargo handling.