2016 (9) TMI 537 - AT - Service Tax

Cenvat credit - service tax paid on Rent-a-cab service for picking up and dropping down of its employees to the factory and back - eligible input service - Held that - Rent-a-cab service availed by a service provider is an eligible input service for the purpose of availing credit whereas in the instant case, the appellant is a manufacturer of final products and not a service provider. Therefore, by following the ratio of this Bench decision in the case of S.K.D. Lakshmanan Fireworks Industries Vs C.C.E. & S.T., Tirunelveli 2015 (12) TMI 1102 - CESTAT CHENNAI , the cenvat credit availed by the appellant-manufacturer on the service tax paid on Rent-a-cab service for picking up and dropping down of its employees to the factory and back is not proper and denied as the said service is not an eligible input service. Accordingly, the impugned order-in-appeal is upheld. - Decided against the appellant

Summary

Issues:
- Eligibility of cenvat credit on Rent-a-cab service for picking up and dropping off employees.

Analysis:
The appeal before the Tribunal concerns the eligibility of cenvat credit on Rent-a-cab service for a manufacturer of Computers under Central Excise Chapter Heading 84. The main issue is whether the service tax paid on Rent-a-cab service for transporting employees to and from the factory qualifies as an eligible input service. The appellant argues that the service is directly related to the manufacturing process and should be eligible for credit. On the other hand, the Revenue supports the impugned order disallowing the cenvat credit.

The Tribunal, after considering the submissions and reviewing the records, notes that the Commissioner (Appeals) extensively examined the eligibility of input service tax credit on Rent-a-cab service. Referring to a previous decision by the same Bench, the Tribunal highlights that Rent-a-cab service availed by a manufacturer is not considered an eligible input service for availing service tax credit. The relevant Rule 2(l) of the Cenvat Credit Rules, 2004 is cited, which specifies that services provided by way of renting a motor vehicle, if not related to capital goods, are not eligible for credit unless used for providing taxable services where credit on motor vehicle is available as capital goods.

The Tribunal emphasizes that the appellant, being a manufacturer and not a service provider, is not entitled to cenvat credit on services related to motor vehicles like Rent-a-cab service. The decision clarifies that the case law cited by the appellant's advocate is irrelevant as it pertains to service providers, whereas the appellant is a manufacturer. Consequently, the Tribunal upholds the impugned order and dismisses the appeal, denying the cenvat credit on Rent-a-cab service for the manufacturer's employees' transportation. The judgment establishes that Rent-a-cab service availed by a service provider is an eligible input service, but for a manufacturer like the appellant, such credit is not permissible.

In conclusion, the Tribunal rejects the appeal, affirming that the cenvat credit availed by the appellant-manufacturer on the service tax paid for Rent-a-cab service is not valid as the service is not considered an eligible input service for a manufacturer of final products. The judgment clarifies the distinction between eligibility for service providers and manufacturers regarding cenvat credit on services related to motor vehicles, ultimately denying the appellant's claim for credit in this case.