2015 (1) TMI 1141 - AT - Service Tax

Disallowance of input tax credit - Nexus with business - Held that - export, port is the place of removal. Accordingly the CHA Service, Airport Service, Port Services, etc., are incurred in the Ports and accordingly the same are allowed. Services being Courier Services, Storage & Warehousing Services, Maintenance of Xerox/Fax Machines and Telephone Services are all related to the business of the appellant and same are accordingly allowed. In respect of Security Services, I find that the same is specifically included in Rule 2(l) of Cenvat Credit Rules. Having consider the rival contention, I hold Security Services is required for smooth running of industry concerned, which is located in remote area and Cenvat credit is accordingly allowed. As regards Transport Services , the appellant states that mainly transport is of the finished goods to its dealers across the country. Further on perusal of the Order-in-Original & Order-in-Appeal, I find that complete facts have not been mentioned, hence the disallowance is on ad hoc basis, which is not proper and against natural justice. Similar is the position with respect to amount of other services head. Thus I set aside and remand to the adjudicating authority to re consider them as per the facts and law. As regards the penalty imposed under various Sections like 76, 77 and 78, Rule 15(3), etc., the same are set aside. - Accordingly, no case of mala fide etc. is made in availing the Cenvat credit- Decided partly in favour of assessee.

Summary

Issues: Disallowance of input tax credit for certain services not related to business.

Analysis:
1. Travel Agent's Services, Courier Services, Insurance Services: Previously allowed in the appellant's own case. Upheld by the Tribunal.

2. Catering Services: Appellant agrees to reverse proportionate credit for amount recovered from employees. Directed to comply within 30 days.

3. Construction Services, Travel and Car Services, Catering Services, Clearing & Forwarding Agency Services: Held to be related to the business by a Co-ordinate Bench and following rulings of High Courts.

4. Airport Services, CHA Services, Port Services: Disallowed in the original order. Appellant argues these services qualify as input services for exports. Tribunal finds in favor of the appellant.

5. Security Services: Included in Cenvat Credit Rules. Deemed necessary for smooth industry operations in a remote area. Credit allowed.

6. Transport Services: Disallowance based on incomplete facts. Remanded for reconsideration.

7. Insurance Services, Servicing of Motor Vehicles: Appellant does not press these grounds.

8. Penalties: Imposed penalties under various sections are set aside due to the disputed nature of Cenvat credit interpretation.

9. Overall Decision: No evidence of mala fide intent in availing Cenvat credit. Appeal partially allowed with specific services either allowed, remanded, or disallowed based on detailed analysis and legal interpretations.