2019 (1) TMI 1497 - AT - Central Excise

CENVAT Credit - input services/capital goods - rent-a- cab service - Held that - There is no dispute on the fact that both the vehicles taken on rent, as per the invoice are capital goods. In terms of definition of the capital goods provided under Rule 2(a) (B) the exclusion entry reads as the rent a cab service provided by way of renting of motor vehicle and so far which is not a capital goods . Since, in the present case the motor vehicle taken on rent are capital goods, hence does not fall under the exclusion category. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Whether the appellant is entitled to Cenvat Credit on rent-a-cab service.

Analysis:
The appellant argued that the rent-a-cab service should not be excluded as the motor vehicle rented is a capital good falling under Chapter 8703. They cited a previous Tribunal case where Cenvat Credit was allowed on rent-a-cab service. The Revenue, represented by the Deputy Commissioner, supported the impugned order. The Tribunal found that the vehicles rented were indeed capital goods as per the definition provided under Rule 2(a)(B). The exclusion entry for rent-a-cab service applies only when the rented motor vehicle is not a capital good. Since the rented vehicles were capital goods, they did not fall under the exclusion category. The Tribunal referenced a previous case to support this interpretation.

Regarding the definition of capital goods, the Tribunal examined the specific clauses under Rule 2(a) and determined that the motor vehicle rented by the appellant fell under the category of capital goods. Consequently, the rent-a-cab service was considered an admissible input service, and credit was deemed admissible. The Tribunal also addressed the denial of credit for conventional services, emphasizing that determining optional versus essential services is not within the Revenue's purview. The appellant had availed conventional services to upgrade their maintenance system related to goods handling, making it essential for their business. The Tribunal set aside the demand for conventional services and rent-a-cab service.

In conclusion, the Tribunal held that the rent-a-cab service in the present case did not fall under the exclusion category of input services, making the credit admissible. The impugned order was set aside, and the appeals were allowed.