2011 (10) TMI 305 - AT - Service Tax

CENVAT credit of service tax paid on transportation of the staff to the work place Held that - The issue is no more res integra. Service of transportation of employees to the factory is admissible for credit as input service under Rule 2(1) of Cenvat Credit Rules, 2004. See CCE, Bangalore-III vs. Stanzen Toyotetsu India (P) Ltd (2011 - TMI - 204471 - Karnataka High Court) Decided in favor of assessee.

Summary

Issues:
1. Entitlement to avail credit of service tax paid on transportation of staff to the workplace.

Analysis:
The main issue in this appeal is whether the appellant is entitled to avail credit of service tax paid on transportation of staff to the workplace. Initially, the Deputy Commissioner dropped the proceedings against the appellant, considering the said services as covered under the definition of input services as per Rule 2(1) of Cenvat Credit Rules, 2004. However, the Commissioner reviewed this decision and disallowed the credit amount of Rs.39,777/-, imposing a penalty of Rs.5,000/- under Rule 15(3) of the same rules, leading to the current appeal.

In the judgment, the Tribunal referred to a decision by the Hon'ble High Court of Punjab & Haryana in the case of CCE, Chandigarh-II vs. Federal Mogul Goetze (India) Ltd., where it was held that the service of transportation of employees to the factory qualifies as an input service under Rule 2(1) of Cenvat Credit Rules, 2004. Additionally, the Tribunal cited a ruling by the Hon'ble Karnataka High Court in the case of CCE, Bangalore-III vs. Stanzen Toyotetsu India (P) Ltd., which emphasized that rent-a-cab services for transporting workers to the factory premises directly impact the manufacturing activity and thus are considered an input service eligible for credit. Based on these precedents, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant, granting them the consequential relief.