2009 (6) TMI 764 - AT - Service Tax

Cenvat credit - Garden Maintenance service - repairs and maintenance of motor vehicles - Held that - Garden Maintenance Service has no nexus even remotely to manufacture or clearance of excisable goods - credit not allowed. Repairs and maintenance of motor vehicles - Held that - the vehicles were admittedly used in connection with the business activity of the assessee. If that be so, they are entitled to CENVAT credit of the service tax paid on repairs and maintenance of such vehicles - credit allowed. Penalty u/s 11AC of CEA - Held that - this provision of law is not invocable on the facts of this case, the demand in this case having been raised within the normal period of limitation. Appeal allowed - decided partly in favor of assessee.

Summary

Issues:
1. Admissibility of CENVAT credit for 'Garden Maintenance' service.
2. Admissibility of CENVAT credit for 'repairs and maintenance of motor vehicles.'
3. Penalty under Section 11AC of the Central Excise Act.
4. Interest under Section 11AB of the Act.

Analysis:

Admissibility of CENVAT credit for 'Garden Maintenance' service:
The appellate tribunal denied CENVAT credit for 'Garden Maintenance' service, stating it lacked any nexus to the manufacture or clearance of excisable goods. The previous order set the precedent for this decision, emphasizing the service was not used directly or indirectly in relation to excisable goods. Consequently, the denial of CENVAT credit for 'Garden Maintenance' service was upheld in this case.

Admissibility of CENVAT credit for 'repairs and maintenance of motor vehicles':
Regarding 'repairs and maintenance of motor vehicles,' the tribunal considered whether the vehicles were used in connection with the appellant's business activity. It was established that the vehicles were indeed utilized in the business activity, entitling the appellant to CENVAT credit for the service tax paid on the repairs and maintenance of these vehicles. Therefore, the appeal was allowed in this regard.

Penalty under Section 11AC of the Central Excise Act:
The issue of penalization under Section 11AC was deliberated, with the tribunal concluding that this provision was not applicable in this case. The demand was raised within the normal period of limitation, rendering Section 11AC inapplicable. Consequently, the penalty imposed under Section 11AC was vacated.

Interest under Section 11AB of the Act:
In relation to interest under Section 11AB, it was noted that since the demand for 'Garden Maintenance' service was upheld, the assessee could not contest the Revenue's decision to levy interest on the amount. Therefore, the proposal to levy interest on the amount was deemed valid.

In conclusion, the appeal was disposed of with the following outcomes:
- The demand for CENVAT credit on 'Garden Maintenance' service was affirmed, along with interest.
- The demand for repairs and maintenance of motor vehicles was allowed.
- The penalty under Section 11AC was lifted.
- The impugned order was modified accordingly.