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2016 (11) TMI 237 - HC - Service TaxCenvat credit - Input services - Mandap Keeping Services and Rent-a-Cab Services - Rule 2(l) of the CENVAT Credit Rules, 2004 - Held that - the Mandap Keeper Services used to organize meetings and events for promotion of their products such as a new vehicle launch, sales promotion events and also for business dealer meets, conferences, Executive Level Meetings etc. which activities being important for the respondent to promote the sale of vehicles are connected to the business of manufacture of the respondent for which they are entitled to avail CENVAT credit, especially when the expense so mentioned is part of cost on which excise duty is paid. Regarding Rent-a-Cab services used by the executives of the respondent for the purpose of travelling required for business meetings, visits to the dealerships, visits to the vendor sites, dealers meet, business promotion activities, vehicles launch, conferences etc. is a an expenditure in relation to business being incurred by the respondent in order to promote the sales and for efficient running of the business for which they are entitled to avail CENVAT credit as the rent-a-cab service has been excluded from the definition of input service by the 2011 amendment w.e.f., 1.4.2011, it has to be held that prior to the amendment, rent-a-cab service came within the definition of input service. As the assessment years in issue in the present case are 2009-10 and 2010-11, both prior to the amendment, the respondent is entitled to CENVAT credit on this service. - Revenue Appeal dismissed.
Issues Involved:
1. Availment of CENVAT credit on Service Tax paid for Mandap Keeping Services and Rent-a-Cab Services. 2. Contravention of Rule 3(1) of CENVAT Credit Rules, 2004. 3. Recovery of CENVAT credit under Rule 14 of CCR-2004 read with Section 11A(1) and Section 11AB of the Central Excise Act, 1944. 4. Liability to penalty under Rule 15(2) of CCR-2004 read with Section 11AC of the Central Excise Act, 1944. 5. Recovery of interest on inadmissible CENVAT credit under Rule 14 of CCR-2004 read with Section 11AA of the Central Excise Act, 1944. Detailed Analysis: 1. Availment of CENVAT Credit on Service Tax Paid for Mandap Keeping Services and Rent-a-Cab Services: The respondent-assessee, engaged in the manufacture of motor vehicles, availed CENVAT credit on service tax paid for Mandap Keeper Service and Rent-a-Cab Service. The Revenue argued that these services were not 'input services' as they were not used directly or indirectly in or in relation to the manufacture of the final product. The Tribunal, however, held that these services were integral to the business activities such as product promotion, business meetings, and dealer interactions, thereby qualifying as 'input services' under Rule 2(l) of the CENVAT Credit Rules, 2004. The Tribunal's decision was supported by precedents like CCE Vs. Stanzen Toyotetsu India (P) Ltd., which held that services like Rent-a-Cab were integrally connected with the business of the manufacturer. 2. Contravention of Rule 3(1) of CENVAT Credit Rules, 2004: The Revenue contended that the respondent had contravened Rule 3(1) by availing CENVAT credit on services not directly related to the manufacture of final products. However, the Tribunal found that the services in question were indeed related to business activities and therefore covered under the definition of 'input service'. The Tribunal emphasized that business activities related to the promotion and marketing of products are included in the definition of 'input service'. 3. Recovery of CENVAT Credit under Rule 14 of CCR-2004 read with Section 11A(1) and Section 11AB of the Central Excise Act, 1944: The Tribunal ruled that since the services availed were indeed 'input services', the CENVAT credit availed by the respondent was legitimate and not liable to be recovered. The Tribunal referred to the inclusive and expansive definition of 'input service' as interpreted by various High Courts, which includes services utilized in relation to business activities. 4. Liability to Penalty under Rule 15(2) of CCR-2004 read with Section 11AC of the Central Excise Act, 1944: Given that the Tribunal found the availed CENVAT credit to be legitimate, the respondent was not liable for any penalties under Rule 15(2) of CCR-2004 read with Section 11AC of the Central Excise Act, 1944. The Tribunal's decision was based on the premise that there was no contravention of the rules by the respondent. 5. Recovery of Interest on Inadmissible CENVAT Credit under Rule 14 of CCR-2004 read with Section 11AA of the Central Excise Act, 1944: Since the Tribunal held that the CENVAT credit availed was admissible, the question of recovering interest on inadmissible credit did not arise. The Tribunal's interpretation of 'input service' included the services in question, thereby negating the need for interest recovery. Conclusion: The High Court dismissed the appeals, affirming the Tribunal's decision that the services availed by the respondent were integral to their business activities and thus qualified as 'input services'. Consequently, the CENVAT credit availed was legitimate, and no penalties or interest were recoverable. The judgment emphasized the broad and inclusive interpretation of 'input service' under the CENVAT Credit Rules, 2004, supporting the respondent's entitlement to the credit.
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