2012 (11) TMI 70 - AT - Service Tax

Denial of input service credit on the ground that assessee are not covered by the definition of input service - Held that - Telephone services and rent-a-cab service used in connection with the business activity of the company are covered by the definition of input services - service of transportation of the employees to the factory is admissible for cenvat credit as input service under Rule 2(1) of Cenvat Credit Rules, 2004 - in favour of assessee

Summary

Issues:
Prayer to dispense with pre-deposit conditions of duty demand based on cenvat credit for telephone, courier, and travel expenses. Denial of input service credit by lower authorities. Appeal against dropped demands. Nexus between input services and manufacturing activities. Applicability of various tribunal and high court decisions.

Analysis:
The judgment revolves around the prayer to dispense with pre-deposit conditions of duty demand concerning cenvat credit for telephone, courier, and travel expenses, which were denied by lower authorities citing lack of nexus with manufacturing activities. The advocate for the appellant argued that the demands initially dropped were reinstated by the Commissioner (Appeals) without establishing a clear link between the input services and business operations. Reference was made to tribunal and high court decisions supporting the admissibility of such services for cenvat credit.

The learned JCDR for the Revenue highlighted tribunal decisions where credit was denied due to the absence of a nexus between the services and the business activities of the assessee. However, the presiding judge examined the judgments cited by both parties and differentiated them based on the specific circumstances of each case. The judge specifically pointed out that the cases cited by the Revenue were not directly applicable to the present scenario where the services were utilized within the factory premises for business purposes.

The judge further distinguished cases related to maintenance and repair services in different locations from the current matter, emphasizing the relevance of the services being used in the factory premises for furthering business activities. By analyzing the various decisions cited by both sides, the judge concluded that the appellant's case aligned more closely with the tribunal and high court decisions supporting the admissibility of the input services for cenvat credit.

Ultimately, considering the direct relevance of the decisions referred to by the appellant's advocate, the judge granted the stay by dispensing with the pre-deposit conditions of duty and penalty. The judge scheduled the appeal for final disposal, indicating that the issue at hand prima facie covered the earlier tribunal decisions. The judgment reflects a detailed analysis of the legal arguments presented by both parties and the application of relevant case law to the specific circumstances of the case.