2015 (8) TMI 29 - AT - Service Tax

Denial of the Cenvat credit on inputs / input services - Credit taken on Security service, chassis of motor vehicle and exempted service to German Embassy - Held that - appellant is providing taxable as well exempted services but nowhere Revenue has proved that appellant has provided exempted services. Infact in two of the invoices issued by the appellant to German Embassy, the appellant did not charge the service tax, does not mean that appellant has provided exempted services. Therefore, I hold that in the absence of any contrary evidence produced by the Revenue, the provisions of Rule 6(3)(c) of Cenvat Credit Rules, 2004 are not applicable to the facts of this case. At the most the case could have been booked against the appellant for non payment of service tax which Revenue failed to do so, therefore, I hold that appellant has correctly taken the Cenvat credit Admittedly the services availed at the residence of Managing Director have no nexus with the output services provided by the appellant as held by this Tribunal in the case of Manikgarh Cement 2012 (11) TMI 601 - CESTAT MUMBAI . Therefore, I hold that appellant is not entitled to take Cenvat credit Admittedly, carts were not registered under Motor Vehicle Act, therefore the contention of revenue that these motor vehicle are not capital goods is not acceptable. In these circumstances, I hold that appellant has correctly taken the Cenvat credit - Decided partly in favour of assessee.

Summary

Issues:
1. Denial of Cenvat credit on inputs / input services.
2. Eligibility of security and maintenance services at the Managing Director's residence for Cenvat credit.
3. Entitlement to Cenvat credit on vehicle chassis converted into water carts/toilet carts.

Issue 1: The appellant contested the denial of Cenvat credit on inputs/input services, arguing that they did not provide exempted services as claimed by the Revenue. The appellant maintained that not charging service tax in two invoices to the German Embassy did not equate to providing exempted services. The tribunal found that the Revenue failed to prove the provision of exempted services by the appellant. Therefore, the tribunal held that Rule 6(3)(c) of the Cenvat Credit Rules, 2004 did not apply, and the appellant correctly availed Cenvat credit amounting to Rs. 33,55,544.

Issue 2: The second issue revolved around the eligibility of security and maintenance services availed at the Managing Director's residence for Cenvat credit. The tribunal determined that these services had no nexus with the output services provided by the appellant, citing a precedent. Consequently, the tribunal ruled that the appellant was not entitled to claim Cenvat credit of Rs. 1,04,884 for these services.

Issue 3: The third issue concerned the appellant's claim of Cenvat credit on vehicle chassis converted into water carts/toilet carts. The tribunal noted that these carts were not registered under the Motor Vehicle Act, rejecting the Revenue's argument that the motor vehicles did not qualify as capital goods. Accordingly, the tribunal held that the appellant rightly availed Cenvat credit of Rs. 4,70,490 on the converted vehicle chassis.

The tribunal concluded that except for the denial of Cenvat credit on security services, the appellant succeeded on other issues. No penalty was imposed on the appellant, considering the disputed nature of the security service credit eligibility at that time. The appellant was directed to pay the amount of Cenvat credit denied on input service credit along with interest, and the appeal was disposed of accordingly.