2018 (7) TMI 2319 - AT - Service Tax

CENVAT Credit - Inputs used for output service or not - steel items such as Steel Plates, HR Plates, Angels, Channels etc. used for repair of Barges which were used for providing output services - HELD THAT - he steel items were used for repair of Barge and Barge is in turn used for providing output service. Therefore, the steel items such as Steel Plates, HR Plates, Angels, Channels were used for providing output service. The issue is squarely covered by the decision of Hon'ble Gujarat High Court judgment in case of MUNDRA PORTS AND SPECIAL ECONOMIC ZONE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS 2015 (5) TMI 663 - GUJARAT HIGH COURT wherein the issue involved was whether the steel, cement used for construction of Jetty is admissible inputs against the provisions of output service i.e. Port Service. The Hon'ble High Court has allowed the credit. Following the ratio of the said judgment where identical facts were involved, the impugned order set aside - appeal allowed.

Summary

Issues involved:
Whether the appellant is entitled to Cenvat credit for steel items used in the repair of Barges used for providing output services.

Analysis:

1. Issue of Cenvat credit eligibility: The main issue in the appeals was whether the appellant could claim Cenvat credit for steel items like Steel Plates, HR Plates, Angels, Channels used in the repair of Barges utilized for output services on which service tax was discharged. The appellant argued that a similar case was decided by the Hon'ble Gujarat High Court in the Mundra Ports case, allowing the credit.

2. Arguments by the parties: The appellant's counsel referenced the Mundra Ports case to support their claim for credit. On the other hand, the Revenue's representative contended that the steel items were used for Barge repair, not directly for providing output services, justifying the denial of credit by lower authorities.

3. Judgment based on precedent: After reviewing the submissions and records, the judge noted that the steel items were indeed used for repairing the Barge, which was subsequently utilized for providing output services. Drawing from the Mundra Ports case precedent where a similar issue of admissible inputs for output services was addressed, the judge found in favor of the appellant. The High Court had allowed credit for steel and cement used in the construction of a Jetty for Port Services, setting a precedent for similar cases. Consequently, the judge set aside the impugned order and allowed the appeals, aligning with the High Court's decision on identical facts.

This detailed analysis of the judgment highlights the key legal arguments, the application of precedent, and the ultimate decision in favor of the appellant's entitlement to Cenvat credit for the steel items used in the repair of Barges for providing output services.