2013 (7) TMI 673 - AT - Central Excise

CENVAT Credit of Service Tax paid on rent-a-cab service - Service Tax paid on rent-a-cab service for transportation of their employees from the residences to the factory premises and back Held that - Relying upon the judgment in the case of Ultratech Cement Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT decided the case benefitting Assessee - Basic thrust of the Revenue s appeal is inputs or input services used in or in relation to the manufacturing of final product Also, relying upon the judgment of Hon ble High Court of Karnataka in the case of CCE Bangalore Vs Stanzen Toyotetsu India Pvt. Ltd. 2011 (4) TMI 201 - KARNATAKA HIGH COURT , and also in the case of Bell Ceramics Ltd. 2011 (9) TMI 792 - KARNATAKA HIGH COURT , allowed the Cenvat Credit Decided in favor of Assessee.

Summary

Issues involved:
The issue involved in this case is the availing of CENVAT Credit of Service Tax paid on rent-a-cab service for transporting employees and whether it qualifies as an input service used in or in relation to the manufacturing of the final product.

Analysis:

1. Issue of Availing CENVAT Credit on Rent-a-Cab Service:
The primary issue in this case pertains to the respondent availing CENVAT Credit for the Service Tax paid on rent-a-cab services used to transport employees from their residences to the factory premises and back during 2007-2008 and 2008-2009. The adjudicating authority initially ruled against the assessee, leading to the appeal being filed.

2. Judicial Precedents and Interpretation of CENVAT Credit Rules:
Upon appeal, the first appellate authority allowed the appeal of the respondent-assessee, citing the judgment of the Hon'ble High Court of Bombay in a relevant case. The crux of the Revenue's appeal focused on the interpretation of Rule 2(l) of the CENVAT Credit Rules, 2004, emphasizing that inputs or input services must be used in or in relation to the manufacturing of the final product. The Revenue argued that employee transportation is a welfare measure and not connected to manufacturing.

3. Legal Precedents and Decision:
The presiding judge referred to a previous case where the Revenue's appeal on a similar issue was rejected, establishing a precedent favoring the assessee. By relying on judgments from the Hon'ble High Court of Karnataka in specific cases, the judge found that the issue at hand had already been decided in favor of the assessee. Consequently, the judge concluded that the impugned order was legally sound, correct, and did not warrant any interference, leading to the rejection of the appeal.

In conclusion, the judgment upheld the decision in favor of the assessee, emphasizing the interpretation of CENVAT Credit Rules and the precedents set by higher courts in similar cases. The ruling highlighted the importance of the nexus between input services and manufacturing activities, ultimately resulting in the rejection of the Revenue's appeal.