2018 (8) TMI 532 - AT - Central Excise

CENVAT Credit - input services - construction services - rent a cab services - whether the appellant is entitled for CENVAT credit in respect of services namely, construction service, rent a cab service and conventional services? - Held that - Though the exclusion in respect of rent a cab services was made with effect from 01.04.2011, the exclusion entry reads as (B) services provided by way of renting of a motor Vehicle, is so far as they relate to a motor vehicle which is not the capital goods. On reading of the above entry, the rent a cab service was excluded only in a case where a motor vehicle which is rented out is not a capital goods - In the present case, the passenger vehicle was taken on rent by the appellant which falls under Chapter Head 87.02 and the rent a cab service falls under clause (0) sub clause (o) of clause 105 of section 65 of the Finance Act. Accordingly, in terms of clause (B) of definition of capital goods provided under Rule 2 (a) the motor vehicle taken on rent by the appellant is a capital good. Therefore, it does not cover under the exclusion entry provided under clause 2 (e) under sub clause B of Rule 2(a) of CENVAT credit rules. Therefore, rent a cab is an admissible input service and credit is admissible - credit allowed. Conventional services - Held that - The credit was denied only on the ground that it is an optional service for the appellant. It is not understood how the Revenue can decide which are the optional and which are the essential services of a business organization. From the fact it is clear that conventional services was availed for upgrading their overall system of maintenance of bulk handling which is related to the manufacture and removal of goods - credit allowed. As regard construction service, the finding of the Ld. Commissioner upheld as much as he has directed to the adjudicating authority for verification. Appeal disposed off.

Summary

Issues:
Cenvat Credit on construction services, convention services, and rent a cab services post-01.04.2011.

Construction Services:
The Revenue disallowed CENVAT credit for construction services, claiming they were excluded from the definition of input service provider. The appellant argued that the service was for maintenance and repair, not new construction, making it eligible for credit. The judge upheld the Revenue's decision, pending verification of the service's nature.

Rent a Cab Services:
The Revenue disallowed CENVAT credit for rent a cab services, citing exclusion rules. The appellant contended that the service was admissible as the rented vehicle qualified as a capital good. The judge agreed, determining that the rented motor vehicle fell under the definition of capital goods, making the rent a cab service eligible for credit.

Convention Services:
The Revenue denied CENVAT credit for convention services, deeming them optional for the appellant. The appellant argued that the services were essential for upgrading maintenance systems related to manufacturing. The judge sided with the appellant, stating that the convention services were directly useful for manufacturing and goods removal, making them admissible for credit.

Conclusion:
The judge set aside the demands for convention services and rent a cab services, finding them eligible for credit. However, for construction services, the judge upheld the Revenue's decision pending further verification. The appeal was disposed of accordingly, with the judge emphasizing the importance of verifying the nature of services before making a final decision.