2011 (9) TMI 748 - AT - Service Tax

Cenvat credit - rent-a-cab service, tour operator service and security - Tribunal in the case of C.C.E., Jaipur-II v. J.K. Cement Works (2009 -TMI - 33571 - CESTAT NEW DELHI) has held that rent-a-cab service used for bringing employees to the factory and dropping them back to their residence is covered by the definition of input service As regards the security, there is no dispute that the same has been availed security to the factory. Security service for security of the property of the factory is an essential activity for any manufacturer and, hence, in our view the same is covered by the term activities related to the business, and therefore, this service would also be covered by the definition of input service and would be eligible for Cenvat credit - Decided in favor of the assessee

Summary

Issues:
Whether the appellant is eligible for Cenvat credit of service tax paid on rent-a-cab service, tour operator service, and security service availed by them during a specific period.

Analysis:
The appellant, a manufacturer of gelatine chargeable to Central Excise duty, availed central excise duty paid on inputs and Service Tax paid on input services used in manufacturing their finished products. The dispute arose regarding the eligibility of Cenvat credit for service tax paid on rent-a-cab service, tour operator service, and security service availed by the appellant from February 2005. The Jurisdictional Assistant Commissioner denied the Cenvat credit amounting to Rs. 78,637/- and imposed penalties under Rule 15 of the Cenvat Credit Rules, 2004. The Commissioner (Appeals) upheld the decision. The appeal was filed against this order.

During the hearing, the appellant's counsel argued that the services of security agency, rent-a-cab, and tour operator were essential for the manufacturing operations and fell under the definition of input service. The Tribunal's precedent in a similar case supported this argument. On the other hand, the Departmental Representative contended that these services had no nexus with the final product's manufacture and were not covered by the definition of input service.

The Tribunal carefully considered both sides' submissions and reviewed the records. It was established that the rent-a-cab and tour operator services were used to transport staff to and from the factory, which the Tribunal had previously deemed as falling under the definition of input service. Therefore, Cenvat credit was deemed admissible for these services. Regarding security services, it was acknowledged that security for the factory's property was essential for any manufacturer and was considered an activity related to the business, making it eligible for Cenvat credit.

Consequently, the Tribunal found the order denying Cenvat credit for rent-a-cab, tour operator, and security services to be unsustainable. The decision was set aside, and the appeal was allowed.