2025 (1) TMI 676 - AT - Service Tax

CENVAT Credit - inputs - mining services - demand for reversal of Cenvat credit on dumpers and tippers was correct - HELD THAT - There is no dispute about the fact that the earthmoving equipments such as dumpers and tippers are being used by the respondent to provide the output services of mining. The demand has been dropped considering these dumpers and tippers to be covered under the definition of inputs given under 2(k) of the Cenvat Credit Rules, 2004 to mean there is no dispute about the fact that earth moving equipments such as dumpers are being used by the respondent to provide output service. The dumpers even if classifiable under Chapter 87, can be considered within the definition of inputs, as per Rule 2(k) of the Cenvat Credit Rules, 2004. Exclusion clause of this definition applies to light diesel oil, high speed diesel oil, motor spirit and motor vehicles. It is observed that despite this definition, the dumpers and tippers are held to not to be considered as motor vehicle by Hon ble Apex Court in the case of Belani Ores Ltd. Etc. Vs. State of Orissa Etc. 1974 (9) TMI 115 - SUPREME COURT wherein it has been observed ' The mere fact that there is no fence or barbed wire around the leasehold premises in not conclusive. There is evidence to show that the public are not allowed to go inside without prior permission, there are gates and a check on ingress andegress is kept by guards who also ensure that no authorised persons have access to the mining area.' Hon ble Apex Court in the case of Boving Fouress Ltd. Vs. Commissioner of Central Excise, Chennai 2006 (8) TMI 189 - SUPREME COURT has held that the principle laid down by Tribunal in one case if accepted by the department, the department is not entitled to raise the same point in other cases. It cannot pick and choose the issues. The demand was ordered to be set aside by Hon ble Apex Court in the said case on this sole ground. Conclusion - The dumpers and tippers used exclusively in mining operations qualify as inputs under Rule 2(k) of the Cenvat Credit Rules, 2004, allowing for Cenvat credit eligibility. There are no reason to differ with the findings in the impugned order considering the dumpers and tippers used by the respondent while rendering the Mining Services, as inputs. For which the Cenvat credit is held to have rightly been availed - appeal of Revenue dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions addressed in the judgment are as follows:

• Whether the dumpers and tippers used by the respondent in providing mining services qualify as "inputs" under Rule 2(k) of the Cenvat Credit Rules, 2004, thereby allowing the respondent to avail Cenvat credit.
• Whether the decision of the adjudicating authority to drop the demand for reversal of Cenvat credit on dumpers and tippers was correct.
• How the definition of "capital goods" and "inputs" under the Cenvat Credit Rules, 2004, applies to the case of dumpers and tippers used in mining services.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Classification of Dumpers and Tippers as Inputs

• Relevant Legal Framework and Precedents: The Cenvat Credit Rules, 2004, particularly Rule 2(k), defines "inputs" as all goods used for providing any output service, excluding motor vehicles. Precedents considered include decisions from the CESTAT and the Supreme Court, notably Soumya Mining Ltd. vs. CCE, Raipur and Belani Ores Ltd. vs. State of Orissa.
• Court's Interpretation and Reasoning: The Tribunal interpreted that dumpers and tippers, though classifiable under Chapter 87, can be considered as inputs under Rule 2(k) because they are used in providing output services. The exclusion of motor vehicles from the definition of inputs does not apply to dumpers and tippers used exclusively in mining areas, as they are not considered motor vehicles per the Supreme Court's decision.
• Key Evidence and Findings: The Tribunal found that dumpers and tippers are used exclusively in mining operations and are not considered motor vehicles for the purposes of Cenvat credit eligibility.
• Application of Law to Facts: The Tribunal applied the definition of inputs under Rule 2(k) to conclude that the dumpers and tippers qualify as inputs, allowing the respondent to avail Cenvat credit.
• Treatment of Competing Arguments: The Tribunal considered the department's argument that dumpers and tippers are capital goods, but found the respondent's reliance on prior favorable decisions persuasive, particularly those that have attained finality.
• Conclusions: The Tribunal upheld the decision that dumpers and tippers qualify as inputs, allowing the respondent to avail Cenvat credit.

Issue 2: Validity of Adjudicating Authority's Decision

• Relevant Legal Framework and Precedents: The adjudicating authority's decision was based on the interpretation of Cenvat Credit Rules and prior Tribunal decisions.
• Court's Interpretation and Reasoning: The Tribunal found no error in the adjudicating authority's decision to drop the demand, as it was consistent with established precedents.
• Key Evidence and Findings: The Tribunal noted that the adjudicating authority correctly applied the definition of inputs and considered relevant precedents.
• Application of Law to Facts: The Tribunal agreed with the adjudicating authority's application of the law, finding that the demand for reversal of Cenvat credit was rightly dropped.
• Treatment of Competing Arguments: The Tribunal rejected the department's arguments against the adjudicating authority's decision, emphasizing the consistency of the decision with the Tribunal's prior rulings.
• Conclusions: The Tribunal upheld the adjudicating authority's decision to drop the demand for reversal of Cenvat credit.

3. SIGNIFICANT HOLDINGS

• Verbatim Quotes of Crucial Legal Reasoning: "Dumpers/Tippers are vehicles which are specially designed for earth moving purposes and are meant to be used in the mining area... they are not to be considered as motor vehicles. Consequently, the appellant would be eligible for cenvat credit on dumpers / tippers as inputs which are used for providing the output service."
• Core Principles Established: The Tribunal established that dumpers and tippers used exclusively in mining operations qualify as inputs under Rule 2(k) of the Cenvat Credit Rules, 2004, allowing for Cenvat credit eligibility.
• Final Determinations on Each Issue: The Tribunal determined that the respondent correctly availed Cenvat credit on dumpers and tippers. The decision of the adjudicating authority to drop the demand was upheld, and the department's appeal was dismissed.