2015 (11) TMI 655 - AT - Service Tax

Admissibility of Cenvat Credit - Rent a Cab service and Insurance service - held that - actual use of rent a cab service has not been produced by the appellant before the lower authority. Ld. Counsel only gave broad submission that rent a cab service is used for the executive of the appellant company for official use, however no evidence was produced. I also observed that even show cause notice also have not verified or brought anything on record regarding actual use of rent a cab service. Therefore in this position this Tribunal cannot take final view whether Cenvat credit in respect of rent a cab service is admissible or otherwise. However in my considered view that if rent a cab service is not used for personal use of the employee and the director of the company but if it is used for official use of the appellant then it will be treated as used in the business activity of the appellant. In my prima facie view, in such case Cenvat credit should be allowed. But since fact is not on record, I prefer to remand the matter to the original authority to verify the fact of use of the rent a cab service If insurance in relation to the residential flat or individual, it is not admissible input service and the credit on such insurance service cannot be allowed. At the same time insurance of stock of input, finished goods, transit insurance, insurance of cash handling and also insurance of equipment and insurance of factory employees which are required under the statue of Factory Act are the services which has direct nexus with the manufacturing as well as business activity of the appellant, on which, in my prima facie view, the Cenvat Credit should be allowed. However the actual use of the such insurance service has not been verified by the lower authority and common allegation i.e. non receipt of input service in the appellant factory was made in the show cause notice. - merely because service in question are not received in the factory, the credit cannot be denied on this ground. The services are not tangible unlike inputs. Service can be provided and used anywhere either in the factory or outside factory. Only aspect to be seen that whether the services are in relation to the manufacture or related to the business activity of the assessee. - matter remanded back - Decided in favour of assessee.

Summary

Issues: Admissibility of Cenvat Credit for rent a cab service and insurance service.

Admissibility of Cenvat Credit for Rent a Cab Service:
The appellant contested the denial of Cenvat Credit for rent a cab service, arguing that it was used for official purposes related to the manufacturing and business activities. The appellant's counsel cited precedents to support their claim. The Revenue, on the other hand, raised concerns about the lack of evidence regarding the actual use of the service, suggesting the possibility of personal use by management or employees. The Tribunal noted the absence of evidence on actual usage and decided to remand the matter to verify if the service was indeed used for official purposes. The Tribunal indicated that if the service was used for official purposes, Cenvat credit should be allowed.

Admissibility of Cenvat Credit for Insurance Service:
Regarding insurance services, the appellant argued that various insurance services were essential for their business activities and should be considered admissible input services. The appellant differentiated between insurance related to residential flats, which they agreed should not be considered an input service, and other insurances directly related to business operations. The Tribunal agreed that certain insurance services, such as those for stock, equipment, factory employees, and business operations, should be considered admissible input services. The Tribunal emphasized that the location of service receipt, whether inside or outside the factory, should not be the sole basis for denying Cenvat credit. The Tribunal remanded the matter to verify the actual use of insurance services and instructed the adjudicating authority to issue a fresh order within two months, allowing the appellant an opportunity for a personal hearing and submission of additional documents.

In conclusion, the Tribunal allowed the appeals by way of remand solely on the issues of admissibility of Cenvat Credit for rent a cab service and insurance service. The Tribunal emphasized the importance of verifying the actual use of the services in question and directed the adjudicating authority to reexamine the matter in light of the Tribunal's observations and precedents cited.