2015 (9) TMI 942 - AT - Service Tax

Denial of CENVAT Credit - outdoor catering, rent-a-cab services, auction, club and association, outward transportation service - Held that - I have seen the certificate issued by the Chartered Accountant certifying that no amount towards providing outdoor catering services has been recovered by the appellant from their employees. In these circumstances, I hold that the appellants are entitled to take Cenvat credit on outdoor catering services up to the period 31-3-2011. Rent-a-cab service for transportation of the passengers from residence to factory or vice versa is an integral part of the manufacturing activity of the appellant and therefore, I hold that appellant is entitled to take Cenvat credit on these services. Sale of Waste and scrap which is arising out of manufacturing of the final product is a part of the business of manufacturing of cement by the appellant. Therefore, I hold that on auction services, the appellant is entitled to take Cenvat credit. Further, I find that the charges have been paid for availment of club and association services for the officials visiting outside the city and same has been paid in the case of business of appellant. Therefore, I hold that on this auction and club and association services, the appellant is entitled to take Cenvat credit. Purchase order shows that goods are to be delivered at the place of buyer on FOR basis and in the invoice, the transportation cost has formed part of the assessable value as the goods are to be delivered at the buyers place. Therefore, the appellant has satisfied the condition of the C.B.E.&C. Circular No. 97/08/07, dated 23-8-2007 which has been supported by the decision of this Tribunal in the case of Lumax Automotive Systems Ltd. (2013 (1) TMI 471 - CESTAT New Delhi). Therefore, I hold that appellant is entitled to take Cenvat credit on outward transportation service as the transportation charges have formed part of the assessable value and goods are to be delivered at the place of the buyers. - Decided partly in favour of assessee.

Summary

Issues:
Denial of input service credit on various services including outdoor catering, rent-a-cab services, auction, club and association, and outward transportation services under Rule 2(l) of Cenvat Credit Rules, 2004.

Analysis:
1. Outdoor Catering Services:
The appellant maintained a canteen as per the Factories Act and availed outdoor catering services. The appellant claimed Cenvat credit based on a certificate showing no recovery from employees for subsidized food. The tribunal allowed credit up to March 31, 2011, but denied it for April to September 2011 due to amended provisions.

2. Rent-a-Cab Service:
The appellant used rent-a-cab services for employee transportation. The tribunal held that such services were integral to manufacturing activity, allowing Cenvat credit. Lack of segregation in the impugned order regarding employee transportation costs did not affect the appellant's entitlement to credit.

3. Auction and Club/Association Services:
Cenvat credit was sought for auction services related to waste and scrap sales and club/association services for officials. The tribunal noted a lack of final order denying credit for auction services and allowed credit for both categories as they were linked to the manufacturing business.

4. Outward Transportation Services:
The tribunal found that transportation charges were included in the assessable value of goods delivered to buyers as per purchase orders. Meeting the conditions of C.B.E.&C. Circular No. 97/08/07 and supported by precedent, the tribunal allowed Cenvat credit for outward transportation services.

In conclusion, the tribunal allowed Cenvat credit on all services except for a specific amount related to outdoor catering services. Due to the entitlement to credit, the demand for interest was deemed unsustainable, and penalties were not imposed, resulting in the appeals being allowed in favor of the appellant.