2018 (9) TMI 894 - AT - Central Excise

CENVAT credit - input service - renting car for use by their employees in connection with manufacturing activities - denial on account of nexus - Held that - An identical issue is decided in the appellant s own case by this Bench in M/S. SUNDRAM FASTENERS LIMITED VERSUS CCE, PUDUCHERRY 2017 (2) TMI 16 - CESTAT CHENNAI , where it was held that there is no evidence to substantiate the claim that the service so availed was in relation to manufacture, and credit cannot be allowed - Cenvat credit of service tax paid on Rent-a-Cab service is not allowable - no penalty imposable - appeal allowed in part.

Summary

Issues:
1. Denial of Cenvat credit for service tax paid on renting cars for employees.
2. Applicability of Rule 2(i) of the CCR regarding exclusions from input services.
3. Consideration of penalty imposition in the case.

Analysis:
1. The appellants, engaged in manufacturing excisable goods, sought credit for service tax paid on renting cars for their employees. SCNs were issued to disallow this credit, claiming it did not fall under the scope of input service. Orders confirmed demands, interest, and penalties. The Commissioner (Appeals) upheld the denial citing Rule 2(i) of the CCR, excluding certain services from input services. Details of demands and penalties were provided for five appeals.

2. The Advocate for the appellant referred to a previous Tribunal order applicable post-01.04.2011, requesting penalty waiver due to ongoing litigation. The AC supported the appellate order. The Tribunal noted a similar issue decided in the appellant's previous case, ruling that Cenvat credit for service tax on Rent-a-Cab service is not allowable. However, following the earlier order, the Tribunal decided not to impose any penalty in this case.

3. The Tribunal's decision was based on the precedent set in the appellant's earlier case, where Cenvat credit for service tax on renting cars was disallowed. The Tribunal reiterated that the penalty should be waived, aligning with the earlier ruling. The decision was pronounced in open court, maintaining consistency with the previous judgment regarding Cenvat credit for Rent-a-Cab services.