2015 (7) TMI 754 - AT - Service Tax

Denial of CENVAT Credit - Various services - Services availed should have relevancy thereof to the business of the appellant and the claim falls under Rule 2(l) of Cenvat Credit Rules, 2004. Service Tax paid on courier service availed was as per evidence at page 66 to 69. So also the evidence supported the cargo handling services availed by the appellant. Revenue at no point of time has brought out irrelevancy of the claim of the appellant. There was integral relationship of the claim with business. Therefore, credit on account of telephone expenses, courier charges and cargo handling charges should be allowed. So far as credit on account expenses incurred on travelling and hiring of car is concerned, that does not disclose whether that was incurred for manufacture or in relation to manufacture or business. In absence of any such integral connection, credit on that count is inadmissible to the appellant - Decided partly in favour of assessee

Summary

Issues: Disallowance of credit of Service Tax on various services; Relevance of evidence for credit claim; Admissibility of credit on different services; Direction for deposit and appropriation of credit; Penalty for inadmissible credit.

In this judgment by the Appellate Tribunal CESTAT NEW DELHI, the issue revolved around the disallowance of credit of Service Tax paid on telephone services, courier services, cargo handling services, travelling, and hiring of car service amounting to Rs. 8,84,672. The appellant argued that the authorities below had not examined the relevant evidence supporting the business relevance of these services, leading to a mechanical disallowance of the credit claimed. The Revenue contended that the appellant did not produce any evidence to support their claim.

Upon hearing both sides and examining the records, the Tribunal found that the appellant had provided evidence supporting the relevance of telephone services, courier services, and cargo handling services to their business, as per the evidence presented. The Tribunal noted that the authorities had failed to consider the evidence presented by the appellant, especially in relation to telephone, courier, and cargo handling services. The Tribunal emphasized the necessity for the appellate authority to consider evidence when it supports the appellant's case.

However, regarding the credit claimed for expenses incurred on traveling and hiring of car services, the Tribunal found a lack of evidence establishing a direct connection to the business or manufacture. As a result, the credit for these services was deemed inadmissible.

The Tribunal directed the appellant to deposit the credit availed on traveling and hiring of car services within thirty days and ordered the authority to appropriate any pre-deposit made towards the inadmissible credit with interest. Any remaining balance after appropriation was to be refunded to the appellant. Additionally, no penalty was imposed for the inadmissible credit, as there was no evidence of deliberate intention to cause evasion.

In conclusion, the appeal was allowed partly, with credit allowed for telephone, courier, and cargo handling services, but disallowed for traveling and hiring of car services due to the lack of an integral connection to the business.