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2009 (9) TMI 287 - AT - Service TaxCenvat Credit-Input Service- the assessee was a manufacturer of bulk drugs and formulations. During the scrutiny of the of the returns, it was found that the invoices did not contain the particulars prescribed in rule 4A(2) of the Service Tax Rule, 1994. The assessee had taken credit of service tax paid in respect of (a) outdoor catering service (b) rent a cab services (c) air travel agent s services (d) servicing of motor vehicle services, which were alleged to be not covered within the ambit of input services . The Commissioner (Appeals) had allowed the credit of service tax on the outdoor catering service to the assessee relying upon the decision of larger bench in the case of CCE v. GTC Industries Ltd. 2008 -TMI - 31592 - CESTAT MUMBAI. He had denied assessee the benefit of the Cenvat Credit of service tax paid in respect of rent a cab service , air travel agent s service, and repair of motor vehicles services only on the ground that definition of input services, as in rule 2, does not allow credit of service tax on other services. In the light of the decision of ABB Ltd. v. CCE&ST 2009 -TMI - 34139 - CESTAT, BANGALORE held that- the impugned order to the extent it upheld the disallowance of Cenvat Credit of service tax paid on the service of rent a cab , air travel agent and servicing of motor vehicle was in correct and liable to be set aside. The appeal is allowed.
Issues:
1. Interpretation of Cenvat credit rules regarding input services. 2. Applicability of Cenvat credit on specific services. 3. Disallowance of Cenvat credit by the adjudicating authority. 4. Decision of the Commissioner (Appeals) on disputed issues. 5. Legal precedent set by the Larger Bench in similar cases. Issue 1 - Interpretation of Cenvat credit rules regarding input services: The case involved a dispute regarding the availing of Cenvat credit by the appellants on duty paid inputs/input services based on invoices that did not comply with the prescribed particulars under rule 4A(2) of the Service Tax Rules, 1994. Additionally, the appellants were alleged to have taken credit on services not covered under 'input services' and failed to prove that such credit was only availed on services related to dutiable goods. The adjudicating authority demanded recovery of the irregularly availed Cenvat credit under relevant sections of the Central Excise Act, 1944. Issue 2 - Applicability of Cenvat credit on specific services: The dispute also revolved around the applicability of Cenvat credit on services such as Air Travel Agent, Rent-a-Cab Operator Scheme, Outdoor Catering Services, and Servicing of Motor Vehicles, which were contended to be outside the scope of 'input services.' The appellants contested the disallowance of Cenvat credit on these services. Issue 3 - Disallowance of Cenvat credit by the adjudicating authority: The adjudicating authority had issued show-cause notices demanding recovery of the input service credit irregularly availed by the appellants. The authority also imposed interest under the relevant provisions of the Central Excise Act, 1944. This decision was challenged by the appellants, leading to the appeal before the Tribunal. Issue 4 - Decision of the Commissioner (Appeals) on disputed issues: The Commissioner (Appeals) set aside the Order-in-original concerning the dispute over invoices but upheld the disallowance of Cenvat credit on services like air travel agency, cab operator service, outdoor catering service, and servicing of motorcycles. This decision prompted the appellants to appeal before the Tribunal. Issue 5 - Legal precedent set by the Larger Bench in similar cases: The appellants relied on the decision of the Larger Bench in the case of CCE v. GTC Industries Ltd., which interpreted rule 2 of the Cenvat Credit Rules, 2004. The Tribunal analyzed the precedents set by the Larger Bench in cases like GTC Industries Ltd. and ABB Ltd. v. CCE&ST to determine the correct application of the Cenvat credit rules regarding input services. The Tribunal disagreed with the findings of the Commissioner (Appeals) and set aside the disallowance of Cenvat credit on specific services based on the settled legal interpretations. In conclusion, the Tribunal allowed the appeals filed by the appellants, setting aside the disallowance of Cenvat credit on certain services based on the established legal precedents and interpretations of the Cenvat Credit Rules.
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