2023 (3) TMI 438 - AT - Service Tax

Classification of services - Port service or Cargo Handling Service? - service provided by the appellant within the port area - CENVAT Credit of service Tax on input services which has been provided for the services in relation to export Cargo - Credit was denied only on the ground that the same was utilized for payment of service tax on Cargo Handing Service in respect of export of Cargo which is excluded from the definition of Cargo Handling Service under Finance Act, 1994 - SCN is time barred or otherwise - penalties under Section 76 and 78 of Finance Act, 1994. CENVAT Credit - HELD THAT - Even though the export Cargo Handling Service is not taxable but the appellant have admittedly paid the service tax and the same was accepted by the department as no objection was raised regarding the payment of service tax. In this fact, when the appellant has paid the service tax, the input service credit is admissible. The appellant have paid more amount of service tax as against the input tax credit, therefore, there is revenue neutral situation in the present case, however, this worksheet was given first time before this Tribunal which needs to be verified - As regard, the Cenvat credit in respect to the input service used in the non taxable output service on which the service tax paid this Tribunal has considered the issue in GATEWAY DISTRIPARKS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD 2018 (5) TMI 1138 - CESTAT MUMBAI where it was held that Though the adjudicating authority decided the matter on principle but did not verify factual aspect of amount of cenvat credit attributed to the exempted cargo handling service vis-a-vis service tax paid by the appellant in respect of export cargo handling service, if it is found to be correct that that appellant have paid service tax which is more than the cenvat credit attributable to the export cargo handling then the demand will not exist. The matter needs to be re considered in the light of the above observation as well as the judgment on the identical issue - Appeal allowed by way of remand.

Summary

Issues involved:
1. Classification of service provided within the port area under Port service or Cargo Handling Service.
2. Correct availing and utilization of Cenvat Credit of service Tax on input services for export Cargo handling.
3. Time-barred nature of the present Show Cause Notice.
4. Imposition of penalties under Section 76 of Finance Act, 1994 and Section 78.

Analysis:
1. The appellant provided export Cargo Handling Service during a specific period. The dispute arose regarding the classification of this service under Port service or Cargo Handling Service. The Revenue contended that since the Cargo Handling of export is excluded from the definition of taxable Cargo Handling Service, the appellant was not entitled to Cenvat credit for input services used in such non-taxable activity. The adjudicating authority confirmed the demand for wrongly availed Cenvat Credit and imposed penalties under relevant provisions.

2. The appellant argued that despite export Cargo Handling not being taxable, they had paid service tax exceeding the Cenvat Credit availed on input services related to this activity. Citing precedent, the appellant claimed that the credit was not wrongly taken. In contrast, the Revenue maintained that Cenvat credit is permissible only when input services are used for taxable output services. They relied on judgments to support their position.

3. Upon reviewing the submissions, the Tribunal found that the denial of Cenvat Credit was based on the non-taxable nature of the output service. However, as the appellant had paid the service tax without objection, the credit was deemed admissible. The Tribunal noted a revenue-neutral situation where the service tax paid exceeded the input credit for each year. Referring to a relevant judgment, the Tribunal decided to remand the matter for a fresh order, considering the observations and precedents on similar issues.

4. In conclusion, the Tribunal set aside the initial order and remanded the case to the adjudicating authority for a reevaluation based on the new perspective provided by the Tribunal's analysis and the applicable legal judgments. The appeal was allowed for further review and consideration by the adjudicating authority.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, the Tribunal's assessment, and the ultimate decision to remand the case for a fresh order.