Ultratech Cement Limited vs Commissioner Of Central Excise And ST, Surat

The issue involved is that whether the appellant is entitled to Cenvat credit in respect of Dredging Services and Marine Consultancy Services

provided by the service provider for smooth navigation of the vessels at private jetty which is used by the appellant. The Adjudicating Authority denied

Cenvat credit on the ground that the place where this service is provided does not belong to the appellant and secondly, it was used by the other jetty

owners also. Being aggrieved by the order-in-original, appellant appealed before the Commissioner (Appeals) who upheld the order-inoriginal.

Therefore, the present appeal is filed by the appellant.

Shri Jigar Shah, learned Counsel appearing on behalf of the appellant submits that the service provided by the service provider to the appellant and

not to anyone else. Expenses for the service borne by the appellant and services were availed for their own business purpose in order to smooth

navigation of vessels, which was provided by jetty. Therefore, there is no dispute that service recipient is the appellant and they have paid the service

charge. Therefore, the service clearly falls under the ambit of Input Service, as defined under Cenvat Credit Rules, 2004. He placed reliance on the

following judgments:-

(a) Coca Cola India Pvt. Limited - 2009 (15) STR 657 (Bom)

(b) Ultratech Cement Limited - 2010 (20) STR 577 (Bom)

(c) Deepak Fertilizers & Petrochemicals Corporation - 2013 (32) STR 532 (Bom)

(d) Saursshtra Cement Limited â€" 2018 (8) TMI 460 â€" CESTAT Ahmedabad

(d) Sanghi Industries Limited - 2019 (12) TMI 528 CESTAT Ahmedabad

(e) Adani Port & SEZ Limited - 2016 (42) STR 1010 (Tri-Ahmd)

(f) Willis Processing Services - 2017 (7) GSTL 12 (Bom)

Shri Dharmendra Kanjani, learned Superintendent (Authorised Representative) appearing on behalf of the Revenue reiterates the findings given by

the lower authority in the impugned order.

I have carefully considered the submissions made by both sides and perused the record. As regards the facts of the case, there is absolutely no

dispute that the appellant themselves are the service recipient. They borne the service charges along with service tax paid by the service provider.

The service was availed for smooth navigation of vessels at the private jetty. Therefore the service was indeed received by the appellant and the

same was used for their business purpose. The expenses of the service was also borne by the appellant which was not in dispute rather they have

submitted an affidavit of the service provider that the entire service charge was paid by the appellant and no any amount was recovered from any

other private jetty owner. As per the Cenvat credit provisions, to allow Cenvat credit, the criteria is such as receipt of service, payment thereof made

to the service provider along with service tax, use of service for the business purpose. These facts are not disputed. It is immaterial that where is the

location of the service was provided. It is important to see that irrespective of such services have been provided anywhere but it is for the purpose of

the assessee and it is received by the assessee. If that test is qualified then it cannot be said that the service was not received by the assessee.

Accordingly, as discussed the above in the given facts, I am clear in my mind that appellant is entitled to Cenvat credit. Identical issue has been

considered by this Tribunal in the case of Sanghi Industries Limited (supra) wherein the Division bench of this Tribunal has taken a view as under:-

“6.6 In respect of dredging services we find that the same was in respect of jetty in the factory premises and is used for transportation as

well as import and export of goods. Since the services are related with the business of the company, the Appellant are eligible to avail credit

of the same. As regard denial of credit on excess tax charged by the service provider, we find that the assessment at the end of the service

provider has not been challenged. The Appellant has paid the amount of service tax charged to thorn. In such case, the credit cannot be

denied to them. We thus are of the view that the Appellant are eligible for availing cenvat credit on impugned services, Resultantly we allow

all the appeals filed by M/s Sanghi Industries Limited in the above terms with consequential reliefs, if any.â€​

In view of the above judgment, credit of the dredging service provided at the private jetty has been allowed. The facts in the present case are also

identical.

In the case of Saurashtra Cement Limited (supra), this Tribunal, considering the admissibility of the input service as regards dredging service has held

as under:-

“4. On careful consideration of the submissions made by both the sides and perusal of the records, I find that the Jetty is a captive active

Jetty of the appellant, which is exclusively used by the appellant, only. At time, the appellant have to get the Dredging done at the Jetty for

proper function of Jetty to improve the draft. Since Jetty is used primarily for import of coal which is used in the manufacture of final

product, Dredging Service is qualified as Input service, it is also a fact that Dredging Service is nothing to do with the customer to whom

final product is sold. The service charge of Dredging Service is borne by the appellant only, which stands absorbed in the overall cost of

manufacturing of cement. Therefore, it cannot be said that the Dredging Service is used for the removal of final product from place of

removal. Also as per Hon’ble Bombay High Court judgement in the case of CC Ex., Nagpur vs. Ultratech Cement Limited - 2010 (20)

STR 577 (Bom.) it was held that if the cost of input service is borne by the assessee and the same stand absorbed in the cost of final product,

such services are qualified as input services and accordingly the CEN VAT Credit is admissible. Considering the ratio laid down by the

Hon’ble High Court and the facts of the present case, I am of the considered view that the Dredging Services used by the appellant is

an input service, hence, CEN VAT Credit is admissible. I also observed that merely because the service was availed outside the factory of the

appellant the credit cannot be denied. Whether the service is availed in the factory or outside the factory, only requirement is that it should

be in relation to the manufacture of final product, therefore, the CEN VAT Credit is admissible. Accordingly I set aside the Impugned order

and allow the appeal.â€​

As this Tribunal has considered the identical issue, there is no reason to deny Cenvat credit in respect of Dredging and Marine Consultancy

Service. Accordingly, the impugned order is set-aside and the appeal is allowed.

(Dictated and pronounced in the open court)