2023 (12) TMI 303 - AT - Central Excise

Recovery of CENVAT Credit - scope of input service - dredging of creek bed - HELD THAT - The principal issue in this dispute is neither that of the appellant not having paid for the service inclusive of tax liability as recorded in the bills raised by the provider nor of such service not having been provided within the factory premises but, in fact, turns on whether the appellant was recipient of service. While input service in rule 2(l) of CENVAT Credit Rules, 2004 is broad enough to cover activities that found even indirect use in manufacture, the primary eligibility, arising from rule 3 of CENVAT Credit Rules, 2004 accruing only to the recipient of such service , is untenable. It is common ground that the waters, which had been deepened by dredging for approach of barges, did not belong to the appellant. Nor do the waters belong to any particular owner other than the Republic of India. The administrative control over such waters is vested with the Maharashtra Maritime Board (MMB) and any improvement, or enhancement of capability, would render the Maharashtra Maritime Board (MMB) to be recipient of service irrespective of the source of payment for such service. This is an aspect that the appellant has not been able to controvert and it is on this aspect that the eligibility of CENVAT credit must rest for, otherwise, rule 3 of CENVAT Credit Rules, 2004 would be rendered superfluous. In M/S. JSW JAIGARH PORT LTD. VERSUS COMMISSIONER OF CGST, KOLHAPUR 2023 (6) TMI 239 - CESTAT MUMBAI , the issue for consideration was the entitlement for credit by the port operator that rested upon the area of the port being under the control of the appellant therein. In M/S. JSW STEEL (SALAV) LTD. AND M/S. WELSPUN MAXSTEEL LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIGAD 2022 (1) TMI 967 - CESTAT MUMBAI , the dispute pertains to the services availed for setting up of, and operation, of the jetty which was under undisputed lease to the appellant. The tax discharged on services performed on such leased property, while the waters and creek bed were not, does conform to the secondary qualification of being the recipient of the service entitling availment of credit of tax paid on taxable service that conform to threshold eligibility by inclusion in definition. The decision of the Tribunal in CCE, NAGPUR VERSUS ULTRATECH CEMENT LTD., 2010 (10) TMI 13 - BOMBAY HIGH COURT arose in similar circumstances of claim by recipient of service and, hence, would not apply to the resolution of the present dispute. There are no merit in the appeal which is dismissed.

Summary

Issues involved:
Recovery of credit under CENVAT Credit Rules, 2004 for the period from March 2006 to September 2010 and from April 2011 to December 2011.

Summary:
The appeal by M/s JSW Steels (Salav) Limited was against the recovery of credit taken under CENVAT Credit Rules, 2004. The appellant operated a jetty for 'captive use' at Salav and had been availing credit for dredging services to ensure sufficient depth in the creek for unloading raw materials. The central excise authorities initiated proceedings for recovery of credit availed, culminating in confirmation of recovery and imposition of penalties. The main issue revolved around the eligibility of the services under rule 3 of CENVAT Credit Rules, 2004.

The appellant contended that the impugned services were eligible as 'input services' under rule 2(l) of CENVAT Credit Rules, 2004, which permit availment of credit for services used directly or indirectly in the manufacture of goods. The appellant argued that denial of credit was inappropriate as the impugned activity fell within the definition of 'input service'. Reference was made to various judicial decisions to support the claim that the services were integral to the manufacturing process, even if not physically received at the factory premises.

The Tribunal considered the primary eligibility for availing CENVAT credit, which accrues only to the recipient of the service. It was noted that the waters deepened by dredging did not belong to the appellant but were under the control of the Maharashtra Maritime Board. The appellant failed to establish itself as the recipient of the service, which is crucial for availing credit under the CENVAT scheme. Precedent decisions were cited to emphasize the importance of recipient status for credit eligibility.

Ultimately, the Tribunal found no merit in the appeal and dismissed it based on the lack of evidence establishing the appellant as the recipient of the services, which is a key requirement for availing CENVAT credit. The decision was pronounced in open court on 06/12/2023.