2018 (5) TMI 1357 - AT - Central Excise

CENVAT credit - input services - rent-a-cab service - Department was of the view that these services were neither used directly nor indirectly nor in relation to the manufacture and therefore the said services do not qualify as input services for availing Cenvat credit of service tax paid on the said services - whether the appellants are eligible for Cenvat credit on Rent-a-Cab service? - Held that - the Hon ble Supreme court in the case of M/s. Maruti Suzuki Ltd. Vs. CCE, Delhi 2009 (8) TMI 14 - SUPREME COURT has held that crucial requirement for availment of input credit of all goods is used in or in relation to the manufacture of final products - In the case on hand, admittedly, the Revenue has not negatived the plea of the appellant that the service availed of Rent-a-cab service had been used for official purposes by the employees of the appellant, for or during the business. There is also no dispute with regard to the period involved in the present case that it was prior to 01.04.2011. The Revenue has lost sight of the fact that the said service was provided by the appellant to its workers to reach the factory premises in time which has a direct bearing on the manufacturing activity/production which, otherwise, the employees would have claimed conveyance allowance - the appellant is eligible to avail Cenvat credit of rent-a-cab service up to 01.04.2011. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of Cenvat credit on 'Rent-a-Cab service' for the period prior to 01.04.2011.

Analysis:

Issue 1: Eligibility of Cenvat credit on 'Rent-a-Cab service' for the period prior to 01.04.2011

The case involved the question of whether the appellants were entitled to Cenvat credit on 'Rent-a-Cab service' for the period before 01.04.2011. The Revenue contended that the services did not qualify as input services for availing Cenvat credit. The appellants argued that Rent-a-Cab service was used for official purposes and should be considered eligible for credit. They relied on various case laws to support their claim. The authorities had disallowed the credit on Rent-a-Cab service, except for a specific amount, and imposed a penalty. The appellants contended that as the services were used for official purposes, they were eligible for the credit.

The Tribunal examined the facts and legal precedents cited by both parties. It noted that Rent-a-Cab service was essential for the movement of employees and business activities. Citing previous judgments, the Tribunal emphasized that Rent-a-Cab service had a direct nexus with manufacturing activities and was not merely a welfare measure. The Tribunal highlighted that the Revenue failed to show how Rent-a-Cab service was unrelated to the manufacturing activities of the appellant. It was observed that the service was provided to ensure timely arrival of workers at the factory, which directly impacted production. The Tribunal referenced the crucial requirement for availing input credit as being 'used in or in relation to the manufacture of final products.' Since the service was used for official purposes by employees, the Tribunal held that the appellant was eligible to avail Cenvat credit on Rent-a-Cab service up to 01.04.2011.

In conclusion, the Tribunal ruled in favor of the appellant, allowing them to avail Cenvat credit on Rent-a-Cab service for the period before 01.04.2011. The Tribunal emphasized the direct nexus between the service and manufacturing activities, rejecting the Revenue's argument against the eligibility of the credit. The decision provided consequential relief to the appellant in line with the findings.