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2024 (3) TMI 1107 - AT - Service TaxCENVAT Credit - input service - nexus with manufacturing of final product or not - Reverse Charge Mechanism (RCM) - Excess availed cenvat credit of service tax - contravention of Rule 7 of CCR. 2004 - Cenvat credit of Education Cess and Secondary Higher Education Cess - violation of Notification No. 12/2015-CE (NT) dated 29.10.2015 - non-payment of service tax on Ocean Freight - non-payment of service tax on Government Fees under RCM. Wrong availment of CENVAT Credit of Rs. 6,86,000/- on the services received from M/s Satnam Construction Co. Fabrication Unit, Delhi - HELD THAT - The appellant has exported PET plant from Neemrana in India to Jamaica, a place outside India with the services to install the same in Jamaica as received from M/s. Satnam Construction Co. Ltd. The later company only has given services to appellant for dismantling the said PET plant clearing, painting and repacking it for being exported. Hence the services received from M/s. Satnam were services exported. The activity done in India by said M/s. Satnam is definitely a service used by the provider of output service for providing output service. Hence, it is well covered in the definition of input services - Cenvat Credit on services received from M/s. Satnam Construction Co. for Rs.6,86,000/- is held admissible to the appellant. Hence the order of the Commissioner (Appeals) is not sustainable qua this issue. Wrong availment of CENVAT Credit of Rs. 5,15,579/- on 30.06.2017 on challan in respect of RCM liability for the month of June-17 paid in July-2017 in contravention of Rule 4(7) of CCR, 2004 - HELD THAT - Section 140(5) of the CGST Act, 2017 provides for entitlement to registered person for taking credit of eligible duties and taxes in respect of inputs and input services received on after the appointed date i.e. 30.06.2017 subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day then denying the credit to the appellant when the input services were received prior to 30.06.2017 and tax was paid under RCM before the due date prescribed under the Finance Act, 1994 would be unjustified and cause undue hardship to the appellant when there is no legislative intent to do so - appellant is held entitled for cenvat credit of Rs. 5, 15,579/-. Excess availment of CENVAT Credit of service tax amounting to Rs. 2,41,451/- in excess on the services which were attributable to appellant as well as other manufacturing unit i.e. Gandhidham, Gujarat in contravention of Rule 7 of Cenvat Credit Rules, 2004 - HELD THAT - It was mandatory for the appellant to distribute credit as per the directions of said Rule 7. Apparently and admittedly Rule 7 has not been followed while distributing credit. Hence it is held that the phagi unit is rightly held to have been allocated with excess credit. Wrong availment of CENVAT Credit total amounting to Rs.1,31,219/- of Education Cess SHE Cess in violation of Notification No. 12/2015-CE(NT) dated 30.04.2015 and 22/2015-CE (NT) dated 29.10.2015 - HELD THAT - Hon'ble Madras High Court in SUTHERLAND GLOBAL SERVICES PRIVATE LIMITED VERSUS ASSISTANT COMMISSIONER CGST AND CENTRAL EXCISE, COMMISSIONER OF CGST AND CENTRAL EXCISE, GOVERNMENT OF TAMIL NADU, UNION OF INDIA, CENTRAL BOARD OF EXCISE AND CUSTOMS, THE CHAIRMAN, GSTN 2019 (11) TMI 278 - MADRAS HIGH COURT has clearly held that accumulated credit of Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess - Credit continues to be available till such time it is expressly stated to have lapsed No notification/circular/instruction expressly provided that credit accumulated would lapse Authorities cannot now take stand that such credit unavailable for use. It is held that available credit as on date of transition was available to an assessee for set off - Availment of credit on this account is therefore held to be wrongly denied. Wrong availment of CENVAT Credit of Rs. 82,720/- on M.S. Bar, Channel, H.R. Coil etc. in violation of Rule 2(a) 2(k) of Cenvat Credit Rules, 2004 used for support of capital goods - HELD THAT - The items on which cenvat credit had been taken were used in the manufacture of capital goods or repair and maintenance of capital goods. The basic idea is that cenvat credit is admissible so long as the inputs are used in or in relation to the manufacture of final product and whether directly or indirectly. The allegation of the department that the goods on which cenvat credit was availed did not satisfy the definition of the capital goods was considered by the larger bench of the Tribunal in the case of BALLARPUR INDUSTRIES LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, BELGAUM 1999 (12) TMI 88 - CEGAT, NEW DELHI wherein the theory of direct participation of the goods eligible for modvat credit had been specifically rejected in the light of its earlier larger bench decision rendered in the case of JAWAHAR MILLS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, COIMBATORE 1999 (4) TMI 153 - CEGAT, NEW DELHI - the findings in Order-in-Appeal on this issue are not sustainable. Non-payment of Service Tax amounting to Rs. 6,64,172/- on Ocean Freight in accordance with the Notification 16/2017- ST dated 13.04.17 - HELD THAT - Hon'ble Supreme Court has held that the levy of IGST on the amount of Ocean Freight as unconstitutional in the case of UNION OF INDIA ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR 2022 (5) TMI 968 - SUPREME COURT . The adjudicating authority had not considered said judgement on the ground that the same has been passed in GST regime. These findings are therefore liable to be set aside Non-payment of Service Tax of Rs. 1,07,393/- on the Government Fees under RCM in accordance with provisions of Notification No. 22/2016-ST - HELD THAT - Tax liability on the amount in question under this issue arises only when any service is provided or agreed to be provided by the government or local authority. In the case of appellant no service has been provided by the DGFT and Transport department. The payment of fees to these departments is for the purpose of procuring Advance License from DGFT for duty free import of raw material for manufacture of final product which is then exported and for obtaining permit respectively. Demand on this issue is also held to be wrongly confirmed. Appeal allowed in part.
Issues Involved:
1. Wrong availment of CENVAT Credit of Rs. 6,86,000/- on services from M/s Satnam Construction Co. 2. Wrong availment of CENVAT Credit of Rs. 5,15,579/- on challan in respect of RCM liability for June-17 paid in July-2017. 3. Excess availment of CENVAT Credit of Rs. 2,41,451/- in excess on services attributable to both the appellant and another unit. 4. Wrong availment of CENVAT Credit of Rs. 1,31,219/- of Education Cess & SHE Cess. 5. Wrong availment of CENVAT Credit of Rs. 82,720/- on M.S. Bar, Channel, H.R. Coil, etc. 6. Non-payment of Service Tax of Rs. 6,64,172/- on Ocean Freight. 7. Non-payment of Service Tax of Rs. 1,07,393/- on Government Fees under RCM. Summary: Issue No. 1: The appellant availed CENVAT Credit of Rs. 6,86,000/- on services from M/s Satnam Construction Co. for dismantling, cleaning, painting, and packing a PET plant for export to Jamaica. The Tribunal held that these services qualify as input services u/s Rule 2(l) of CCR, 2004, as they were used by the provider of output service for providing output service. The order of the Commissioner (Appeals) was set aside. Issue No. 2: The appellant availed CENVAT Credit of Rs. 5,15,579/- on challan for RCM liability for June-17 paid in July-2017. The Tribunal noted that with the introduction of GST from 01.07.2017, the appellant had no option but to avail credit in its ST-3 return for June-17. Denying this credit would cause undue hardship. The Tribunal allowed the credit and set aside the findings of the lower authority. Issue No. 3: The appellant was alleged to have availed excess CENVAT Credit of Rs. 2,41,451/- in its Phagi Unit instead of Gandhidham Unit. The Tribunal held that post-amendment in Rule 7 of CCR, 2004, it was mandatory to distribute credit proportionally. The appellant's allocation was not as per Rule 7, and the finding of the lower authority was upheld. Issue No. 4: The appellant availed CENVAT Credit of Rs. 1,31,219/- of Education Cess & SHE Cess. The Tribunal referred to Notifications No. 12/2015-CE(NT) and 22/2015-CE(NT) and the judgment in Sutherland Global Services Pvt. Ltd., holding that credit accumulated would not lapse unless expressly stated. The Tribunal held the credit was wrongly denied and set aside the findings of the lower authority. Issue No. 5: The appellant availed CENVAT Credit of Rs. 82,720/- on M.S. Bar, Channel, H.R. Coil, etc., used for repair and maintenance of capital goods. The Tribunal, citing various judgments, held that items used for repair and maintenance are eligible for credit. The findings of the lower authority were set aside. Issue No. 6: The appellant was alleged to have not paid Service Tax of Rs. 6,64,172/- on Ocean Freight. The Tribunal referred to the Supreme Court's judgment in UOI Vs. Mohit Mineral Pvt. Ltd., holding the levy of IGST on Ocean Freight as unconstitutional. The findings of the lower authority were set aside. Issue No. 7: The appellant was alleged to have not paid Service Tax of Rs. 1,07,393/- on Government Fees under RCM. The Tribunal held that no service was provided by the DGFT and Transport department, and the fees paid were for procuring licenses and permits, not for services. The demand was held to be wrongly confirmed, and the findings of the lower authority were set aside. Conclusion: The Tribunal set aside the order confirming demands on all issues except Issue No. 3 regarding disproportionate distribution of credit to the Phagi unit. The appeal was allowed except for the demand on Issue No. 3.
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