2017 (7) TMI 57 - AT - Central Excise

CENVAT credit - tour operator service - denial on account of nexus - Rule 15(3) of CCR, 2004 - Held that - the appellants have lawfully availed credit on input service of tour operator service for transportation of employees from and to the factory as well as for company official to visit the suppliers premises - reliance was placed in the case of THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, MANGALORE Versus M/s MANGALORE REFINERY AND PETROCHEMICALS LTD. 2016 (1) TMI 481 - KARNATAKA HIGH COURT - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against Commissioner (A)'s order allowing CENVAT credit on mobile telephone services, confirming demand on tour operator service, interest, and penalty under Rule 15(3) of CCR, 2004.

Analysis:
1. Facts and Background: The appellant, engaged in manufacturing various products, availed CENVAT credit on duty paid on capital goods, inputs, and service tax paid on input services to reduce cascading effect. Department audited records and issued show-cause notice for availing credit on mobile charges and tour travel service charges beyond the definition of input service.

2. Contentions: Appellant contended that the impugned order did not consider judicial precedents and lawfully availed credit on tour operator service related to business activities and manufacturing. They cited various decisions supporting their interpretation of input service under Rule 2(l) of CCR, 2004.

3. Counter-Arguments: The AR reiterated the impugned order's findings, stating that tour operator service charges were not relevant to manufacturing activities directly or indirectly.

4. Judgment: The Tribunal, after considering submissions and cited judgments, found the issue in favor of the appellant. Relying on the precedents, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief, if any. The operative portion of the order was pronounced on 13/06/2017.