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October 2011

(2011) 23 STR 399 (Tri.-Chennai) — Perambalur Sugar Mills Ltd. v. Commissioner of Central Excise, Trichy.

By Puloma Dalal, Jayesh Gogri
Chartered Accountants
Reading Time 1 mins
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Demand raised under Cargo handling agency
services — Cenvat credit on GTA services denied for want of proper
documents — CBEC’s Circular F.No. B-11/1/2002-TRU, dated 1-8-2002 — Once
activity not leviable and service tax paid, credit eligible — Demand
set aside.

Facts:
The appellants were engaged in the
activity of loading or unloading of cargo and were paying service tax
under the category of GTA services. The demand of service tax was raised
on the ground that the services rendered by the appellants were in fact
‘Cargo handling services’ and the Cenvat credit was inadmissible as the
same was taken without any prescribed documents. The appellants
submitted that in light of the CBEC’s Circular F.No. B-11/1/2002-TRU,
dated 1-8-2002, individuals undertaking the activity of loading or
unloading cargo would not be liable to service tax as ‘Cargo handling
agency’.

Held:
The Tribunal observed that once the
activity itself was held not to be leviable to service tax and the
service tax was paid at the insistence of the Department, the assessees
were entitled to claim Cenvat credit. Accordingly, the demand together
with interest and penalty was set aside.

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