2018 (9) TMI 1119 - AT - Central Excise

CENVAT credit - hiring of cabs (Rent-a-Cab Services) - It appeared to the Department that the said services are not eligible for credit as it falls within the exclusion Clause of the definition of input services. Whether the appellants are eligible for credit on Rent-a-Cab Services after 01.04.2011, whereby the exclusion in clause (B) has been introduced in the definition of input services Held that - The services of Rent-a-Cab will not qualify as input service and will not be eligible for credit if the motor vehicle is not a capital good for the service provider - It can be seen from the definition of capital goods that when the motor vehicle which is used for transporting of the passengers or for renting of vehicles, is registered in the name of the service provider, the same would be a capital good for the service provider. Thus, if the motor vehicles are capital goods for the service provider who is providing service of Rent-a-Cab / renting of cabs, then the said services would be eligible for credit. The said fact as to whether these vehicles are capital goods for the service provider requires verification. Appeal allowed by way of remand.

Summary

Issues:
1. Eligibility of CENVAT Credit on Rent-a-Cab Services
2. Interpretation of exclusion clause in the definition of input services

Analysis:
1. The case involved the eligibility of the appellants for CENVAT Credit on Rent-a-Cab Services from 2012-13 to 2014-15. The appellant argued that the services were integral to their manufacturing activity, but the lower authorities disallowed the credit based on the exclusion clause related to motor vehicles not being capital goods for the service provider. The appellant requested a remand for furnishing documents to prove that the motor vehicles were capital goods for the service provider, citing a Tribunal decision in a similar case.

2. The Ld. AR supported the findings of the impugned order, stating that the Rent-a-Cab Services fell within the exclusion clause and were not eligible for credit. The issue for consideration was whether the motor vehicles used for Rent-a-Cab Services were capital goods for the service provider, as per the definition provided in the CCR, 2004. The definition specified that if the motor vehicle used for transportation or renting was registered in the name of the service provider, it would be considered a capital good for them.

3. The Tribunal analyzed the definition of capital goods and emphasized that if the motor vehicles were capital goods for the service provider, then the appellant would be eligible for credit on Rent-a-Cab Services. The matter required verification to determine if the motor vehicles were indeed capital goods for the service provider, necessitating a remand to the adjudicating authority for further consideration. The Tribunal highlighted that the exclusion clause should be applied only after verifying whether the motor vehicles were capital goods for the service provider.

4. The Tribunal referred to a previous case where it was established that if the motor vehicles used for Rent-a-Cab Services were considered capital goods for the service provider, then the services would qualify as input services. The appellant had provided certificates from service providers stating that the vehicles were capital goods, supporting their claim for credit. Based on these discussions, the Tribunal concluded that if the motor vehicles were capital goods for the service provider, the appellant would be eligible for credit, and the matter was remanded for verification by the adjudicating authority.

5. In the final decision, the Tribunal set aside the impugned order and remanded the appeal for further consideration, emphasizing the need to verify whether the motor vehicles used for Rent-a-Cab Services were capital goods for the service provider to determine the eligibility of the appellant for credit. The matter was to be handled by the adjudicating authority with an opportunity for the appellant to provide necessary documents for verification.