2017 (9) TMI 357 - AT - Service Tax

CENVAT credit - job-work - security services - Held that - Since the service tax in respect of security service was paid by the appellant for ensuring proper security at its job workers premises, in respect of the job worked goods belonging to the appellant, we are of the view that credit taken on such service cannot be denied by the department on the ground that the said service has not been utilized within factory of manufacture of the final product - credit allowed. CENVAT credit - testing charges - denial on the ground that there is no evidence to show that such testing charges were in relation to goods manufactured by the appellant - Held that - Tribunal in the case of Commissioner of Central Excise Nagpur Vs Ultra Tech Cement Ltd. 2010 (7) TMI 302 - CESTAT, MUMBAI , in an identical situation, has allowed the cenvat credit in respect of the services used/ utilized at a place which is situated outside the factory premises - credit on the testing charges cannot be denied to the appellant. Cargo Handling Services - activities of unloading of transformers by the appellant at the customer s premises - Held that - the appellant has only arranged the labour for unloading of goods at the customer s site. Thus, the requirement of the definition of cargo handling service is not satisfied in this case - the Tribunal in the case of N. Rajshekara & Co. Vs CCE Maysore 2008 (7) TMI 66 - CESTAT Bangalore has set aside the demand holding that the assessee had not handled the goods by loading from one place to unloading at another place; thus, the demand confirmed under cargo handling service will not be sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of cenvat credit on service tax paid on security services availed at job worker's premises.
2. Denial of cenvat credit on invoices issued by Central Power Research Institute.
3. Confirmation of service tax demand under the category of cargo handling service for unloading transformers at customer's premises.

Analysis:

Issue 1: Denial of cenvat credit on service tax paid on security services at job worker's premises:
The appellant, engaged in manufacturing transformers, availed cenvat credit of service tax paid on security services at the job worker's premises. The department denied this credit, asserting lack of utilization within the factory of manufacture. However, the Tribunal noted that the service tax was paid to ensure security for goods manufactured on job work basis. Citing precedent (MRF Ltd. Vs CCE Chennai), the Tribunal allowed the cenvat benefit for security services used at the job worker's premises. The appellant provided job work challans and evidence of receiving goods, supporting the credit claim.

Issue 2: Denial of cenvat credit on invoices issued by Central Power Research Institute:
The denial of cenvat credit on testing charges by the authorities was based on the lack of evidence linking the charges to goods manufactured. However, the Tribunal referred to a similar case (Commissioner of Central Excise Nagpur Vs Ultra Tech Cement Ltd.) where credit for services used outside factory premises was allowed. Consequently, the Tribunal held that the credit on testing charges cannot be denied to the appellant.

Issue 3: Confirmation of service tax demand under cargo handling service for unloading transformers at customer's premises:
The department confirmed a service tax demand under cargo handling service for unloading transformers at the customer's premises. The Tribunal observed that the appellant, as a manufacturer of transformers, arranged labor for unloading goods to ensure safe delivery. It was noted that mere unloading of goods at the customer's site, primarily involving sale of goods, does not warrant service tax levy under cargo handling service. Referring to a relevant case (N. Rajshekara & Co. Vs CCE Maysore), the Tribunal emphasized that the demand under cargo handling service was not sustainable as the appellant only arranged for unloading, not both loading and unloading as required by the definition of cargo handling service.

In conclusion, the Tribunal found no merit in the impugned order and allowed the appeal in favor of the appellant, setting aside the earlier decision.