2012 (11) TMI 78 - AT - Central Excise

CENVAT Credit of Service Tax paid - Rent-a-cab utilized for transportation of employees from Vadodara to the factory in village Ankhi - Held that - As decided in M/s. Maruti Suzuki Ltd. Versus Commissioner of Central Excise, Delhi-III 2009 (8) TMI 14 - SUPREME COURT CENVAT Credit benefit will be available if the service can be related to the business of manufacture. In this case, the factory is located in a village and the village does not have adequate facilities for employees and therefore to get the proper employees, it becomes necessary for the assessee to provide transportation facility from the nearest city. Therefore, it cannot be said that the assessee is providing transportation facility to its employees as a welfare measure, but it is necessity to ensure that the manufacture takes place properly - in favour of assessee.

Summary

Issues:
Whether the assessee is eligible for the benefit of CENVAT Credit of Service Tax paid on rent-a-cab utilized for transportation of employees.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Ahmedabad, involved appeals by the Revenue and cross objections by the assessee on the eligibility of CENVAT Credit for Service Tax paid on transportation services. The issue revolved around whether the transportation of employees from one location to another could be considered as having a nexus with the business of manufacture to allow for the credit. The Tribunal considered various precedents and arguments presented by both sides to reach a decision.

The Revenue argued that the credit was not admissible based on the decision of the Hon'ble Supreme Court in a specific case and a Tribunal decision. On the other hand, the assessee relied on a different Tribunal decision to support their claim for the credit. The Tribunal, represented by Mr. B.S.V. Murthy, carefully analyzed the submissions made by both parties and referred to relevant legal precedents to make a well-informed decision.

In the judgment, it was noted that a High Court decision had considered the issue of eligibility of Service Tax paid on various services in relation to the business of manufacture. The Tribunal found that in the present case, the transportation service provided by the assessee was a necessity to ensure proper manufacturing operations due to the location of the factory in a village lacking adequate facilities for employees. Therefore, the transportation service was deemed to have a direct relation to the business of manufacture, establishing the required nexus for claiming the CENVAT Credit.

Moreover, the Tribunal distinguished a previous Tribunal decision that was not in alignment with the High Court decision referenced, indicating that it was not necessary to follow the earlier decision. Consequently, the Tribunal concluded that the Department had not presented a sufficient case to reject the assessee's claim for the CENVAT Credit.

In the final order, the Tribunal rejected the appeals filed by the Revenue and disposed of the cross objections filed by the assessee, thereby settling the matter in favor of the assessee's eligibility for the CENVAT Credit on the service tax paid for employee transportation.