2016 (12) TMI 1625 - AT - Central Excise

CENVAT creidt - Input services - Rent-a-Cab service - Outdoor Catering service - Held that - Service Tax paid in relation to Rent-a-Cab Service and out door catering service is covered under the scope of Input Services as defined under Rule 2(l) of the Cenvat Credit Rules 2004 as held by the Honble Gujarat High Court in the aforesaid Essar Oil Ltd. 2015 (12) TMI 1062 - GUJARAT HIGH COURT - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Admissibility of Cenvat Credit on Rent-a-Cab and Outdoor Catering services.
2. Interpretation of Input Services under Rule 2(l) of the Cenvat Credit Rules 2004.
3. Application of penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the CEA, 1944.

Analysis:

Issue 1: Admissibility of Cenvat Credit on Rent-a-Cab and Outdoor Catering services
The case involved the appellant, engaged in the manufacture of Organic and Inorganic Chemicals, who availed Cenvat Credit on Rent-a-Cab and Outdoor Catering services. The Commissioner of Central Excise issued a show cause notice alleging inadmissible credit availed by the appellant. The Ld Commissioner (Appeals) confirmed the demand, interest, and equal penalty under Rule 15(2) of Cenvat Credit Rules, 2004. The appellant contended that the services fell under Input Services as defined under Rule 2(l) of the Cenvat Credit Rules 2004, citing relevant cases such as Principal Commissioner Vs Essar Oil Ltd and CCE, Ahmedabad Vs. Ferromatic Milacrom (I) Ltd. The appellant had not availed credit on these services post-March 2011 and had reversed proportionate credit for Outdoor Catering Service. The tribunal found that the Service Tax paid for Rent-a-Cab Service and Outdoor Catering service was indeed covered under the definition of Input Services as per the cited cases, leading to the setting aside of the impugned order and allowing the appeal with consequential relief.

Issue 2: Interpretation of Input Services under Rule 2(l) of the Cenvat Credit Rules 2004
The crucial aspect of the case revolved around the interpretation of Input Services under Rule 2(l) of the Cenvat Credit Rules 2004. The appellant argued that Rent-a-Cab and Outdoor Catering services qualified as Input Services based on relevant legal precedents. The tribunal concurred with this interpretation, emphasizing the decisions of the Hon'ble Gujarat High Court in cases like Essar Oil Ltd. and Ferromatic Milacrom (I) Ltd., which supported the inclusion of these services under Input Services. This interpretation played a pivotal role in the final decision to allow the appeal and provide relief to the appellant.

Issue 3: Application of penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the CEA, 1944
The imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC of the CEA, 1944 was a significant issue in the case. The Ld Commissioner (Appeals) had upheld the penalty along with the demand and interest. However, the tribunal, upon accepting the appellant's arguments regarding the admissibility of Cenvat Credit on the disputed services, set aside the impugned order. This decision implied that the penalty imposed was no longer applicable, showcasing the direct impact of the interpretation of Input Services on the overall outcome of the case.

This detailed analysis of the legal judgment highlights the key issues, arguments presented by the parties, relevant legal interpretations, and the final decision rendered by the tribunal.