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TMI Blog2021 (9) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... er deep draft could not have reached the said port - there is absolutely no doubt that the dredging of channel was therefore essential for enabling the appellant to provide the port services expected by its customer Essar steel. Therefore, the dredging service has direct nexus with the output services of port services and cargo handling services - the dredging services used for providing the port service/Cargo handling service is admissible as input service. CENVAT Credit - Navigation channel for which dredging was availed - private property or not - HELD THAT:- The sea coast parcel on which construction of the port is allowed is always on lease basis and not on the ownership basis however, the operation of port is carried out by the port operator. It is also undisputed position that the entire port operation on the port including the Port service and cargo handling service are liable to payment of service tax on the said output service. Therefore, any service is availed in relation to the operation of port or construction of port is indeed the input service. Accordingly, the assessee is entitled for cenvat credit in respect of such input service i.e. dredging service used for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed Cenvat credit on dredging services from 19.04.2010 to 1.12.2012 whereas the Show Cause Notice denying the said Cenvat credit was issued on 13.04.2015. Therefore, the entire demand is under the extended period, hence in view of the above facts the demand is not sustainable on limitation also. The demand of cenvat credit is not sustainable on merit as well as on limitation - Appeal allowed - decided in favor of appellant. - Excise Appeal No.10210 of 2016 - A/12358/2021 - Dated:- 17-9-2021 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri Vipin Jain, Ms Dimple Gohil, Ms Isha Shah,Shri Vishal Agarwal, Shri Alice, Advocates for the appellant Shri Deepak Kumar, Special Counsel for the Respondent ORDER Brief facts of the case are that M/s Essar Bulk Terminal Limited 27th KM. Essar House, Surat - Hazira Road, Hazira, Surat 394270 (hereinafter referred to as the M/s EBTL for the sake of brevity) are having Service Tax Registration No. AACH4005JST001 for providing various taxable services including Port Service Cargo Handling Sevice under section 69 of the Finance Act, 1994 and also availing the CENVAT credit on inputs, input Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maritime Board and it shall be a common channel which can be used by other port or captive jetties. During the audit, it was noticed that M/s EBTL has appointed sub-contractors viz M/s Van Oard Dredging and Marine Contractor and M/s Van Oard India Pvt. Ltd to reclaim the said common navigation channel owned by the Gujarat Maritime Board by way of dredging during the period from April, 2010 to September, 2014. After reclamation of common channel owned by The Gujarat Maritime Board, M/s. EBTL has availed Cenvat credit on the dredging service provided by the sub contractors for reclaim of common navigation channel, treating it as input service for providing output service viz. port Services. The audit officers observed that dredging was undertaken in the navigation channel which leads to jetty of M/s EBTL is not their private property but belongs to the Gujarat Maritime Board and the channel is also used not only by M/s EBTL but also by several others and, therefore, it cannot be said that the benefit of dredging channel accrues to M/s EBTL only in relation to the activity undertaken by them and not to other, As the said dredging activity for reclamation of common navigation water ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in Rule 2(l)(i) of CCR, 2004 has been squarely satisfied i.e the dredging services have been used for provision of output services and hence the said services fall under the definition of input services. There is a direct nexus between the input services and output services as held in the case of Adani Port Special Economic Zone Ltd Vs CST, Ahmedabad- 2016 (42) STR 1010(Tri- Ahd) and hence , cenvat credit is eligible on the said services. Since the said services do not fall under any of the exclusions provided under Rule 2(l), the credit cannot be denied. 2.1 He, without prejudice of the above submits that due to mere facts that benefit of a service may also accrue to a third person cannot be a ground for denying credit as long as the input service availed was necessary for providing the taxable output service. The only stipulation under CCR, 2004 for being eligible to avail cenvat credit is that the input service should be used for providing output service. Here is no dispute that the dredging service is utilized by the appellant for rendering port services and cargo handling services. The mere fact that the benefit of the said dredging service could theoretically be enjoye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , is incapable of being used by others as all the other jetties are further away towards the landside which cannot be accessed from the appellants jetty unless the channel is further dredged. Thus for only other users to use the channel it would have to dredged further up to the said user s jetty. The appellant has been given the responsibility of navigational safety measures which in turn does not affect the operations of other jetties adversely. Since the appellant s dredged channel has been deep draft only until its jetty, no other user is allowed to use the deep draft as it can result in catastrophic damages due to grounding of ships if deep draft ships navigate into waters which do not have the required depth. 2.3 Shri Vipin Jain further submits that it is also an undisputed fact that entire expenses for dredging and the service tax thereon has been borne by the appellant. In terms of the permission granted to the appellant, it is debarred by GMB from recovering any charges for usage of said channels from others and the same forms a part of the output services being rendered by the ESIL. In this regard he placed reliance on Hon ble Gujarat High Court Judgment in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CESTAT-AHM d. Saurashtra Cement Ltd vs. CCE 2018-TIOL-2749-CESTAT-AHM 2.6 Without prejudice, He further submits that the demand raised in the present case is time barred as it has been raised beyond the normal period of limitation. The appellant was duly registered with the Service Tax Department and regularly filed its ST-3 returns wherein availment of credit is duly reflected. Copies of the agreements entered into with GMB have been submitted to the department and to the audit parties visiting the site. Therefore, it cannot be said that that appellant has suppressed any information from the department. The SCN seeks to invoke extended period solely on the ground that it has suppressed the fact of the license agreement dated 25.03.2010 for construction and use of deep water jetty. However, the agreement was duly submitted to the department from time to time during the various audits conducted by the Department viz in March 2011 and June-July 2012. Appellant submits that the audit report dated 07.09.2012 particularly recorded the license agreement and referred to condition 22 thereof for pointing out a short payment of service tax by GMB on wharfage charges. Therefore, Shri V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct nexus with the output services of port services and cargo handling services. 4.2 As per the definition of input service in rule 2(l)(i) of Cenvat credit rules, 2004 the dredging service which have been used for provision of Output service clearly fall under the definition of input service. This issue is no longer res-integra as the similar services has been allowed as input service for the same output service in the case of Adani Port Special Economic Zone Ltd Vs CST-2016(42) STR1010 (Tri.Ahd). The relevant extract of the order is reproduced below: 18 . We find that the Notification No. 25/2007-S.T. (supra) exempts from payment of service tax on the Commercial or Industrial construction services. It would apply to a commercial concern in relation to construction of Port or other Port provided service to any person exempted from the whole of service tax leviable thereon. In the present case, the Port was constructed by the contractor appointed by the appellant for construction of Jetty, the exemption is applicable to the contractor. The contractors are not eligible to avail Cenvat credit. On the other hand, the appellant paid service tax on Port service. Hence, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at credit in respect of such input service i.e. dredging service used for providing output service i.e. Port Service. 4.4 In the present case also even though the appellant was allowed to construct the port/jetty in particular navigation channel by GMB but the fact remains that the operation of the port is solely carried out by the appellant. It is a settled position that for availing the cenvat credit it is not necessary that the location from where the output service is provided should be owned by the service provider. As long the service is provided by the service provider for which any input service is received and used for providing output service, the cenvat credit on such input services shall be available for utilizing the said cenvat credit for payment of service tax on the output service. Therefore, the ownership of the location from where the service is provided is immaterial for availing the cenvat credit on input services as well as for payment of service tax on the output services. If the contention of the revenue is accepted that the appellant is not entitled for the cenvat credit on the ground that the jetty is not owned by them in such case even the service tax l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as 2002 (150) E.L.T. 759 and His Automotives Ltd. v. CCE, Chennai, reported as 2004 (163) E.L.T. 116, wherein it has been held that ownership of goods is no criteria for denying Modvat credit in view of the Circular of the Board dated 1-3- 1999. Counsel for the respondent has also placed reliance on Union of India v. Marmagoa Steel Ltd., reported as 2008 (229) E.L.T. 481 (S.C.). 6 . We have gone through the order passed by the Tribunal as well as the case law cited by the counsel for the parties. In the present case, although the capital goods were imported by M/s. Frito Lay India, but the endorsement in the Bill of Entry was made in favour of the respondent. In Sharda Motors case (supra) it has clearly been held that ownership of goods is no criteria for denying Modvat credit, specially in view of the Circular dated 1-3-1999. Since in the present case, the Bill of Entry was made by M/s. Frito Lay India in favour of the respondent, thus, Modvat credit could not be denied to the respondent. 7 . In view of the above, we are of the considered opinion that the Tribunal was correct in allowing the Modvat credit on the capital goods received by the respondent particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot admissible to the appellant, We find that firstly, the entire contract of dredging of navigation channel is between the service provider i.e. M/s Van Oard Dredging and Marine Contractor and M/s Van Oard India Pvt. Ltd and the appellant. The entire service charge along with service tax was borne by the appellant no other persons are involved in the transaction of said services. Therefore, the appellant only is the sole recipient of the services. Accordingly, the appellant is entitled for the entire cenvat credit. Without prejudice to our above finding we further find that, it is the theoretical terms in the agreement with Gujarat Maritime Board that the said navigation channel can be used by other users also. However, as submitted by the appellant and the fact on record the navigation channel was dredged only upto the location of the appellant s jetty. Therefore, looking to the factual location of the jetty no other users can pass through that channel because the channel has no free through way, for this reason the said navigation channel has the dead end at one side of the jetty. In this position even though there is a condition in the agreement with GMB to allow the navigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed in the factory or outside the factory, only requirement is that it should be in relation to the manufacture of final product, therefore, the Cenvat Credit is admissible. Accordingly, I set aside the impugned order and allow the appeal. 4.7 The Similar issue once again considered by this tribunal in the case of Ultra tech Cement Ltd 2021 TIOL 161 CESTAT-AHD wherein the following the orders in the case of Saurashtra Cement (Supra) and Sanghi Industries (Supra) the cenvat credit on dredging service for jetty was allowed. 4.8 In view of the above judgments which are on identical issue and the fact which is in the present case the issue is no longer res-integra. 4.9 The appellant have also raised the issue on limitation that the demand for the extended period is not sustainable as there is no suppression of fact. On the careful scrutiny of the records and submission made by the appellant we find that the appellant have undisputedly intimated to the department regarding approval given by GMB for construction of the 550 meters deep water cargo handling terminal facility as well as permission for approval of transfer from Essar steel to the appellant. It was also intimat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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