2015 (9) TMI 217 - AT - Service Tax

Cenvat credit of service tax - services for inspecting vehicles providing MS plates at regional transport office - Held that - input service means any service which is used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products. In the case in hand, it is undisputed that CNG can be filled only in those cylinders which are certified to be fit to carry the CNG and conform to the provisions of the Explosives Act and rules made thereunder. It is also mandated that there is restriction in filling of any cylinder with compressed gas unless fitness of such cylinder is approved by an agency authorised to do so. It is undisputed that the cylinder cannot be filled with CNG unless they are certified to be worthy of filling of gas which in this case is being done by the outside agency appointed by the appellant. It has to be held that unless the cylinders are certified, the appellant cannot fill the gas in the said cylinder, is an activity in connection to their business of sale of CNG. Certification of the cylinder did not take place in the manufacturing area, will also not carry the case of the revenue any further as the definition of input service does not restrict that the said service have to be rendered in the factory premises of the manufacturer - that when the cylinder are certified by an agency and service tax is paid on such services Cenvat credit cannot be denied to appellant. - Impugned order unsustainable - Decided in favour of assessee.

Summary

Issues involved:
- Eligibility to avail Cenvat credit of service tax paid on inspecting vehicles providing MS plates at regional transport offices.

Detailed Analysis:
The case revolves around the issue of whether the appellant is entitled to Cenvat credit for service tax paid on inspecting vehicles providing MS plates at regional transport offices. The revenue argues that the services are not connected to the manufacturing activity of the appellant and thus do not qualify as input services under Rule 2(l) of the CENVAT Credit Rules, 2004. Both lower authorities ruled against the appellant on this matter.

The appellant's advocate argues that the testing agency's services are essential for the business as CNG cannot be sold without the cylinders passing the required tests. Referring to legal precedents, she contends that the definition of "input service" should be interpreted broadly, and the certification of cylinders is integral to the manufacturing and marketing of CNG. She also highlights that the cost of testing is included in the final price of CNG, citing relevant case law to support the appellant's position.

The Departmental Representative counters that the services are rendered to vehicle owners, not the appellant, and that filling cylinders with CNG is not a manufacturing activity. Additionally, the inspection of cylinders occurs outside the manufacturing area, which, according to the representative, disqualifies the appellant from claiming Cenvat credit.

The judgment rules in favor of the appellant, citing multiple reasons. Firstly, it interprets the definition of "input service" under Rule 2(l) broadly, emphasizing that the certification of cylinders is crucial for the appellant's business of selling CNG. Secondly, it dismisses the argument that services must be rendered within the factory premises, stating that the location of certification does not affect the eligibility for Cenvat credit. Lastly, the judgment acknowledges the safety implications of certifying cylinders, emphasizing that such services are essential for public safety.

The judgment aligns with the appellant's arguments, drawing on legal precedents to support the decision. It sets aside the impugned order and allows the appeals, providing consequential relief to the appellant. The ruling was pronounced on 23/06/15 by the Member of the Tribunal.