2015 (1) TMI 721 - AT - Central Excise

Denial of input service credit - Denial on the premise that input service credit availed by the appellants does not qualify as input service as per Rule 2(l) of Cenvat credit Rules, 2004 - outdoor catering service and rent-a-cab service - nexus with the business of manufacture of the appellant - Held that - any services availed by a manufacturer of excisable goods in the course of their business, is entitled to take Cenvat credit. Admittedly, both the services have been availed by the appellant in the course of business of manufacturing of excisable goods. Therefore, I hold that appellant is entitled to take Cenvat credit of service tax on these services, subject to the fact that appellant has not recovered the amount from the employees towards rendering service of outdoor catering and rent-a-cab services. As this fact has not been examined by the lower authorities, therefore, matter needs examination at the end of adjudicating authority to ascertain whether appellant has recovered any amount from the employees towards rendering a service of outdoor catering and rent-a-cab service. If any amount recovered from the appellant from the employees towards these services, same is not entitled to input service credit. With these terms the impugned order is set aside. - Matter remanded back - Decided in favour of assessee. Whether the appellant is entitled to take input service credit on repair and maintenance service availed by the appellant for repair and maintenance of the vehicles which have been used in their business activity - Held that - any service availed by an assessee being a manufacturer of excisable goods in the course of their business, the assessee is entitled to take Cenvat credit. Admittedly, the vehicles in question have been used by the appellant in the course of their business being a manufacturer of excisable goods. Therefore, I hold that the appellant are entitled to take Cenvat credit on repair and maintenance services. In these circumstances, impugned order is set aside. - Following decision of Ultratech Cement 2010 (10) TMI 13 - BOMBAY HIGH COURT - Decided in favour of assessee.

Summary

Issues:
1. Availment of Cenvat credit on outdoor catering service and rent-a-cab service.
2. Availment of Cenvat credit on repair and maintenance services for company vehicles.

Analysis:

Issue 1: Availment of Cenvat credit on outdoor catering service and rent-a-cab service:
The appellant appealed against the denial of input service credit on outdoor catering and rent-a-cab services, contending that these services were availed in the course of manufacturing activities. The appellant argued that the outdoor catering service was necessary due to statutory requirements to maintain a canteen for factory workers. They also claimed that the rent-a-cab service was used to transport workers to the factory. The Revenue opposed these claims, stating that there was no evidence of statutory canteen requirements or recovery of amounts from employees for these services. The tribunal held that services availed in the course of manufacturing activities are eligible for Cenvat credit, provided no amounts are recovered from employees for these services. The matter was remanded to examine the quantification of admissible input service credit.

Issue 2: Availment of Cenvat credit on repair and maintenance services for company vehicles:
The appellant sought Cenvat credit on repair and maintenance services for company vehicles used in business activities. The Revenue relied on a previous decision to deny credit, but the tribunal distinguished the case, stating that it concerned input credit, not input service credit. Referring to the High Court decision in the Ultratech Cement case, the tribunal ruled that any service availed by a manufacturer in the course of business is eligible for Cenvat credit. As the vehicles were used in manufacturing activities, the tribunal allowed the appeal, overturning the impugned order and granting consequential relief.

In conclusion, the tribunal allowed both appeals, granting Cenvat credit for the services in question, subject to specific conditions and legal interpretations.