2018 (4) TMI 587 - AT - Central Excise

CENVAT credit - input service - services providing assistance for maintenance of company vehicle and equipments - transportation charges for providing shift basis rent-a-cab service - service of providing drivers for operating company vehicle - cleaning and maintenance of garden around the factory building. Maintenance of vehicle - Held that - maintenance of vehicle is in respect of appellant company s own vehicle which is used for factories activity therefore it is covered under first limb of definition of input service which allows the Cenvat credit in respect of services which is used in or in relation to the manufacture of final product - credit allowed. Providing drivers for operating company vehicle - Held that - driver is in respect of appellant company s own vehicle which is used for factories activity therefore it is covered under first limb of definition of input service - credit allowed. Gardening services - Held that - this tribunal time and again held that maintenance of garden is under statutory obligations under Factory/ Industrial Act to maintain environment of the factory premises - credit allowed. Rent a cab service - period involved is June, 2014 to January, 2015 - Held that - w.e.f. 1-4-2011 rent a cab service was excluded from the definition of input .service, therefore due to such exclusion the credit in respect of rent a cab service is not available to the appellant - credit not allowed. Appeal allowed in part.

Summary

Issues involved:
Whether the appellant is entitled to Cenvat credit for service tax paid on various services used in the manufacturing activity.

Analysis:
The issue in this case revolves around the entitlement of the appellant to claim Cenvat credit for service tax paid on services like maintenance of company vehicles, transportation charges for rent-a-cab service, providing drivers, and cleaning and maintenance of the factory garden. The Revenue contended that these services did not qualify as input services as they were not directly used in or in relation to the manufacturing of the final product, leading to the disallowance of Cenvat credit. The Ld. Commissioner(Appeals) upheld this decision, prompting the appellant to appeal.

Ms. Mansi Patil, the Ld. Counsel for the appellant, argued that the credit availed during a specific period was time-barred since the show cause notice was issued after a substantial delay. She further contended that all the services were integral to the overall manufacturing operations of the appellant and thus fell within the definition of input services. To support her argument, she cited various judgments, including Commissioner of Central Excise, Nagpur Vs. P.B. Bobde, Commissioner of C. Ex. Allahabad Vs. Surya Bhan Tripathi, Commissioner of Service Tax, Pune Vs. M/S. Nihilent Technologies Pvt Ltd, Commissioner of C. Ex. Bangalore-II Vs. Millipore India Pvt Ltd, and Lifelong Meditech Ltd Vs. Commissioner of C. Ex. & S.T. Gurgaon-I.

Shri. Deepak S. Chavan, the Ld. Superintendent(A.R.) representing the Revenue, reiterated the findings of the impugned order. After considering the arguments from both sides and examining the records, the Member (Judicial) found that the input services in question, such as maintenance of company vehicles, driver services, rent-a-cab service, and gardening services, were indeed essential for the manufacturing activities of the appellant. The tribunal held that maintenance of the company's vehicles and services of drivers, which were used for factory activities, fell under the definition of input services eligible for Cenvat credit. Additionally, the tribunal acknowledged that maintaining the factory garden was a statutory obligation under the Factory/Industrial Act to preserve the factory environment. Citing previous judgments, the tribunal allowed the credit for gardening services. However, concerning rent-a-cab service, it was noted that for the period in question, this service was excluded from the definition of input service. Therefore, the tribunal ruled that the credit for rent-a-cab service was not admissible. Consequently, the impugned order was modified to allow credit for maintenance of company vehicles, driver services, and gardening services, while disallowing credit for rent-a-cab service. The appeal was partly allowed.