2017 (3) TMI 868 - AT - Service Tax

CENVAT credit - supporting structures for capital goods - Held that - the service of cargo handling stands provided by the appellant. However, the Service Tax has been paid under BAS by considering the total service rendered by the appellant as a composite service, whose essential character is that of crushing of iron ore, which is an activity under BAS. Since, cargo handling is specified under the definition of capital goods, the appellant will be entitled to the cenvat credit claimed on tippers - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Disallowance of Cenvat credit on steel items used for support structures.
2. Disallowance of Cenvat credit on tippers under Rule 2(a)(B) of the Cenvat Credit Rules, 2004.

Analysis:

Issue 1: Disallowance of Cenvat credit on steel items used for support structures:
The appellant appealed against the Commissioner's order restricting the recovery of wrongly availed Cenvat credit to a lower amount. The appellant argued that the steel items like MS Channel, H.R. Sheet, M.S. angles used for making supporting structures were not eligible for Cenvat credit. The appellant cited previous decisions allowing Cenvat credit for structural items used in supporting structures for capital goods. The Tribunal referenced the decision in the case of M/s Lafarge India Ltd and ruled in favor of the appellant, allowing the benefit of Cenvat credit on such structural items.

Issue 2: Disallowance of Cenvat credit on tippers:
The disallowance of Cenvat credit on tippers was based on Rule 2(a)(B) of the Cenvat Credit Rules, 2004, which allows credit for motor vehicles used for providing specified taxable services. The appellant, registered under Business Auxiliary Service, argued that the activities involved both cargo handling services and business auxiliary services. The Commissioner noted that the appellant paid Service Tax under Business Auxiliary Service for the entire service rendered, including cargo handling. However, the Tribunal found that the service of cargo handling was provided by the appellant, and since cargo handling is specified under the definition of capital goods, the appellant was entitled to the Cenvat credit claimed on tippers. The appeal was allowed in favor of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, allowing the Cenvat credit on steel items used for support structures and on tippers, based on the arguments presented and previous legal precedents.