2017 (4) TMI 839 - AT - Central Excise

CENVAT credit - credit availed on this service is denied for the reason that rail freight was brought under service tax net only w.e.f 01.09.2009 - Held that - if the service provider is a person other than Government Railways the services are liable for levy of service tax. The various invoices produced alongwith the appeal memorandum shows that the appellants have received the services of transportation of goods on rail from M/s Boxtran and Concor. These are agencies which undertake transportation of goods by rail operated by the Indian Railways. Therefore the service tax has been rightly collected by these companies and rightly paid by the appellant. In that case the appellants are eligible for credit, off the service tax paid on transportation of goods by rail. The services received by the appellant for repair/maintenance of SAP software is a taxable service. The appellant is therefore eligible for credit. CENVAT credit - demurrage charges - Held that - The invoices establish that the said service tax was paid in respect of demurrage charges incurred by them for the goods imported, which was used by them in the factory. Therefore the credit has been wrongly denied. Appeal allowed - decided in favor of assessee.

Summary

Issues: Disallowance of CENVAT Credit on input services

Analysis:
1. The appellants, engaged in Polystyrene manufacturing, faced a show cause notice for irregular CENVAT Credit availed on inputs and services for the period July 2007 to June 2013.
2. The original authority granted relief of &8377; 5,37,42,920/- but disallowed credit on input services worth &8377; 23,84,561/-, leading to the present appeal.
3. The Ld. Consultant highlighted services like rail transport, IT software services, and air transport for which credit was denied.
4. Regarding rail transport, the denial was based on service tax applicability from 01.09.2009, but the appellant used services from private companies, not Government Railways.
5. The definition of Government Railways under the Railways Act clarified taxable services from 01.05.2006 if provided by non-Government Railways.
6. The appellant received rail services from private entities from July 2007 to June 2012, correctly availing service tax credit.
7. Disallowance of IT software services credit was challenged, citing Circular No.96/7/2007-ST on taxable maintenance or repair services.
8. The credit on air transport was wrongly disallowed for demurrage charges on imported goods used in manufacturing, not for final product clearance.
9. The Ld. AR reiterated the impugned order findings, leading to detailed explanations by the Consultant on taxable services.
10. Amendments from 01.05.2006 and 01.09.2009 brought rail transport services under the tax net, exempting only Government Railways.
11. Notification No. 33/2009 clarified the tax applicability, ensuring correct service tax collection by private rail service providers.
12. The Circular on IT software services confirmed taxable maintenance or repair services, justifying the credit availed by the appellant.
13. The denial of demurrage charges credit was deemed incorrect as it was for imported goods used in manufacturing, not final product transportation.
14. The judgment set aside the disallowance, allowing the appeal based on the correct interpretation of service tax applicability and credit eligibility.