2018 (12) TMI 17 - AT - Service Tax

CENVAT Credit - capital goods - tippers - Held that - The adjudicating authority in the impugned order has accepted the fact that appellant had discharged the service tax liability under both categories viz., site formation services and cargo handling services. It is also undisputed that cargo handling services are services which are classified under Section 65 (105) (zr) of the Finance Act, 1994 and these services are considered as eligible output services for availing Cenvat Credit on motor vehicles registered as capital goods - when it is undisputed that revenue is collecting service tax from the appellant under cargo handling services and having not re-classified the services, they cannot now turn around and say that the services rendered by the appellant could not fall under the category of cargo handling services for denying for availment of legitimate Cenvat Credit of Central Excise duty paid on tippers - credit allowed. Valuation - includibility - inclusion of value of free supplies of explosives and diesel in assessable value - period November, 2006 to September, 2008 - Held that - The matter is settled by the Apex Court in the case of Union of India vs. Intercontinental Consultants & Technocrats Pvt Ltd 2018 (3) TMI 357 - SUPREME COURT OF INDIA where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax - demand set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of Cenvat Credit on Central Excise duty paid on tippers.
2. Inclusion of value of free supplies of explosives and diesel in the tax assessment.

Analysis:

Issue 1: Eligibility of Cenvat Credit on Central Excise duty paid on tippers:
The appellant availed Cenvat Credit on Central Excise duty paid on tippers, considering them eligible. However, the Department contended that such credit was not permissible as the tippers did not meet the definition of capital goods under Rule 2(a) of Cenvat Credit Rules. The appellant argued that they had discharged service tax liability under site formation and cargo handling services, making them eligible for Cenvat Credit. The Tribunal noted that cargo handling services fell under the definition of capital goods, and since the revenue had collected service tax under cargo handling services without re-classifying them, the appellant was entitled to Cenvat Credit on tippers. The Tribunal relied on previous decisions supporting the appellant's position and held that the impugned order denying Cenvat Credit was unsustainable.

Issue 2: Inclusion of value of free supplies of explosives and diesel in the tax assessment:
Regarding the inclusion of the value of free supplies of explosives and diesel provided by another company, the Tribunal referred to a Supreme Court judgment in a similar case and held that such free supplies should not be considered as part of the gross amount charged for service tax assessment. The Tribunal dismissed the demands confirmed by lower authorities on this ground, citing the settled legal position established by the Supreme Court. Consequently, the Tribunal set aside the demands related to the inclusion of free supplies in the tax assessment.

In conclusion, the Tribunal allowed the appeals, ruling in favor of the appellant on both issues. The appellant was granted relief regarding the eligibility of Cenvat Credit on tippers and the exclusion of the value of free supplies of explosives and diesel from the tax assessment.