2016 (2) TMI 685 - AT - Central Excise

Cenvat credit on courier service, rent-a-cab service and also on architecture and other services which are used in or in relation to the business activity carried on by the appellant - Held that - Since all the disputed services activities are related to the appellant s business activities and all expenses incurred for manufacture and export of goods from part of the value of the goods and hence the credit of service paid thereon is admissible and has been so held in the various judgments cited supra by the appellant. Further, the Hon ble High Court of Bombay in the case of Ultratech Cement Ltd. (2010 (10) TMI 13 - BOMBAY HIGH COURT ) has interpreted that the input services as not only cover services of falling in the substantial part of Rule 2(l) of the Cenvat Credit Rules, 2004 but also cover services which are covered under the inclusive part and they are the services rendered prior to the commencement of manufacturing activity as well as services rendered after manufacture. The inclusive part of the definition includes services rendered in relation to business. Therefore, keeping in view the judgment cited above, which covers all the services on which cenvat credit was denied by the department, we are of the considered view that the appellant is entitled to cenvat credit on all the services and the impugned order is not sustainable in law and the same - Decided in favour of assessee.

Summary

Issues:
- Appeal against denial of cenvat credit of service tax on various input services like courier services, rent-a-cab, tour and travel service, and architecture consultancy service.
- Nexus between the services and the business activity to establish entitlement to cenvat credit.

Analysis:
1. Denial of Cenvat Credit on Input Services:
The appellant, engaged in manufacturing activities, availed cenvat credit of service tax on various input services. The respondent objected to the credit availed on services like courier, rent-a-cab, tour, travel, and architecture consultancy. A show cause notice was issued, resulting in the confirmation of a demand by the Deputy Commissioner. The Commissioner (Appeals) upheld the denial of credit with interest and penalty, leading to the current appeal. The appellant argued that the impugned order did not consider their submissions and cited relevant legal provisions, judgments, and CBEC instructions to support their claim for credit on these services.

2. Legal Interpretation and Precedents:
The appellant contended that the services in question, including courier, rent-a-cab, and tour and travel services, qualify as input services under Rule 2(l) of the Cenvat Credit Rules, 2004, as they are used for clearance of goods and transportation of employees. They relied on various judgments, such as CCE vs. Apar Industries Ltd. and Stanzen Toyotetsu, to support their position. Additionally, they highlighted the decision of the Hon'ble Bombay High Court in Ultratech Cement Ltd. case, which upheld the admissibility of service tax paid on these services. The appellant argued that penalty should not apply as the disputed services are indeed input services, and the interpretation of law regarding cenvat credit eligibility does not warrant penalty imposition.

3. Establishing Nexus and Entitlement to Credit:
The respondent, however, contended that the appellant failed to establish a nexus between the services and the business activity, thereby questioning the entitlement to cenvat credit on the services in dispute. The Appellate Tribunal, after considering the arguments and precedents cited, found that all the disputed services were related to the appellant's business activities and expenses incurred for manufacturing and exporting goods. The Tribunal relied on the interpretation provided by the Hon'ble Bombay High Court in Ultratech Cement Ltd. case, which broadened the scope of input services to include those related to business activities. Consequently, the Tribunal concluded that the appellant was entitled to cenvat credit on all the services, setting aside the impugned order and allowing the appeal with consequential relief.

This detailed analysis of the judgment showcases the legal arguments, interpretations, and precedents considered by the Appellate Tribunal in deciding the appeal against the denial of cenvat credit on various input services, emphasizing the importance of establishing a nexus between the services and the business activities to determine entitlement to such credit.