2013 (10) TMI 330 - AT - Central Excise

Scope of Input Service under Rule 2(I) - Rent-a-cab Service - Whether the service of rent a cab availed by the appellant for bringing workers to the factory and dropping them back to their residence can be treated as input service under Rule 2 (l) of the Cenvat Credit Rules, 2004 Held that - Following CCE, Bangalore - III vs. Stanzen Toyotetsu India (P) Ltd. 2009 (5) TMI 371 - CESTAT, BANGALORE - an input or input service, which has no nexus with the manufacture of a particular final product would not be eligible for Cenvat credit - While, this general principle guides the availability of Cenvat credit in respect of inputs and input services used in connection of manufacture of a particular final product, the existence of nexus is a matter of fact, which has to be determined in each case - the issue of nexus in respect of the service, in question, has been examined and the High Courts and the Tribunal have expressed the view that there is nexus between availing of rent a cab service to enable the workers to reach the factory in time and manufacture of final product - the order is not sustainable - The same is set aside Decided in favour of Assessee.

Summary

Issues:
Whether the service of rent a cab availed by the appellant for bringing workers to the factory and dropping them back to their residence can be treated as input service under Rule 2 (l) of the Cenvat Credit Rules, 2004.

Analysis:
The judgment revolves around the issue of whether the rent a cab service provided to workers by the appellant can be considered an input service for Cenvat credit. The Department issued show cause notices denying the credit, but the original Adjudicating Authority ruled in favor of the appellant, stating that the service falls under the definition of input service. However, the Commissioner (Appeals) reversed this decision, leading to the filing of two appeals.

The appellant's counsel cited various judgments, including those of the Hon'ble Karnataka High Court and the Tribunal, supporting the view that rent a cab service for workers is related to the manufacturing business and qualifies as an input service. On the other hand, the Department argued, referring to the Apex Court's judgment, that there must be a nexus between the service and the manufacture of the final product for Cenvat credit eligibility. The Department also presented Tribunal judgments emphasizing the necessity of nexus for input services.

The Tribunal analyzed the conflicting views and held that the rent a cab service enabling workers to reach the factory in time has a nexus with the manufacturing of the final product. The Tribunal referenced judgments from High Courts and the Tribunal itself that supported this nexus, concluding that the service qualifies as an input service for Cenvat credit. The Tribunal emphasized that the existence of nexus is a factual determination and found in favor of the appellant based on the established nexus in this case. Consequently, the impugned order was set aside, and the appeals were allowed.

In conclusion, the Tribunal's decision clarifies the eligibility of rent a cab service as an input service for Cenvat credit, emphasizing the importance of establishing a nexus between the service and the manufacturing process. The judgment provides a detailed analysis of the legal principles and precedents, ultimately ruling in favor of the appellant based on the established nexus in this specific scenario.