2012 (8) TMI 835 - AT - Central Excise

Denial of CENVAT Credit - Rent-a-cab service - Penalty - Held that - If any amount of service provided is recovered from the employees, to the extent amount recovered, the assessee is not entitled for input service credit. As the issue involved is interpretation of the provisions, therefore, penalty is not warranted in the instant case. Accordingly, penalty is waived. But the appellants are directed to contact the adjudicating authority for quantification of the amount which is deniable - Both adjudicating authority and the appellants shall calculate the amount deniable and thereafter the appellant shall pay the amount deniable alongwith interest - Decided partly in favour of assessee.

Summary

Issues involved: Stay application and main appeal for Cenvat Credit on rent-a-cab service.

Analysis:

1. Stay Application and Main Appeal: The issue in this case pertains to the Cenvat Credit availed by the appellants on rent-a-cab as an input service. The Revenue contended that rent-a-cab service is not covered under Rule 2(l) of the Cenvat Credit Rules, 2004, thus the appellants are not entitled to claim Cenvat Credit. The adjudicating authority passed an order to this effect. The Commissioner (Appeals) partially allowed the appeal, stating that the amount recovered from employees is deniable under Rule 2(1) of the CCR, 2004, and imposed a penalty equal to the deniable amount. The appeal before the tribunal sought waiver of the penalty.

2. Legal Precedents and Interpretation: The tribunal considered legal precedents such as the case of CCE, Nagpur Vs. Ultratech Cements Ltd, where it was held that any service related to the manufacturing of the final product qualifies for input service credit. Additionally, references were made to cases like Semco Electricial Pvt Ltd. Vs. CCE, Pune and GTC Industries Limited, where it was established that if any amount of service provided is recovered from employees, the assessee is not entitled to input service credit to that extent. Given the interpretational nature of the issue, the tribunal concluded that penalty imposition was not justified in this case.

3. Decision and Directions: The tribunal decided to waive the penalty imposed on the appellants. However, they directed the appellants to contact the adjudicating authority for quantification of the amount deniable as discussed in the judgment. Both parties were instructed to calculate the deniable amount, and the appellants were ordered to pay the deniable amount along with interest. Consequently, the stay application and the main appeal were disposed of based on the above considerations.

This comprehensive analysis of the judgment highlights the key issues, legal interpretations, and the final decision rendered by the tribunal in relation to the Cenvat Credit dispute concerning rent-a-cab services.