2016 (2) TMI 977 - AT - Service Tax

CENVAT credit - input service - Rule 2(l) of the Cenvat Credit Rules, 2004 - renting of immovable service - construction services - general insurance services - rent-a-cab services - Held that - I find that general insurance services availed by the assessee for the benefit of their employees only who are working in the factory of the assessee. Therefore, the Ld. Commissioner (A) has rightly dropped the demand. Further I find that rent-a-cab services have been availed by the assessee for the employees bringing them from their residence to factory or vice versa. In that circumstances, the said services qualifies as input services in the light of the decision of the Hon ble High Court of Bombay in the case of Ultratech Cement Ltd., 2010 (10) TMI 13 - BOMBAY HIGH COURT . Therefore, I do not find any merit in the impugned order qua the service on which Revenue has filed an appeal before me. In these circumstances, the appeal filed by the Revenue is dismissed. Renting of immovable service - Held that - I find that the appellant is having other unit which has been on rent therefore, whatever amount paid as rent by the assessee and service tax paid thereon is entitled as input service as the said service has been received by the assessee in the course of their business of manufacturing. Therefore, the impugned order qua denial of Cenvat credit on renting of immovable property service is set-aside. Construction services - Held that - I find that the assessee has availed Cenvat credit on construction services. As the construction services has been taken away from the definition of Rule 2(l) of the Cenvat Credit Rules, 2004 i.e. from 1-4-2011. In that circumstances Cenvat credit availed on constructions services post 1-4-2011 is denied. But for the period prior to 1-4-2011, I hold that the assessee is entitled to avail credit as the same is availed by the assessee in the course of the business of manufacturing. Accordingly, the matter is consigned to the adjudicating authority for quantification of input services credit to be denied to the assessee for the period post 1-4-2011. Appeal disposed off by way of remand.

Summary

Issues:
1. Denial of Cenvat credit on various services under Rule 2(l) of the Cenvat Credit Rules, 2004.
2. Challenge to the order regarding denial of Cenvat credit on rent-a-cab service and general insurance service.
3. Challenge to the order denying Cenvat credit on renting of immovable property service.
4. Availment of Cenvat credit on construction services post 1-4-2011.

Analysis:
1. The assessee availed input service credit on multiple services during the period of 1-4-2007 to 30-12-2011. A show cause notice was issued to deny Cenvat credit on certain services based on Rule 2(l) of the Cenvat Credit Rules, 2004. The Adjudicating Authority allowed credit on some services, which was further upheld by the Ld. Commissioner (A). However, the Revenue challenged the order regarding rent-a-cab service and general insurance service, while the assessee challenged the denial of credit on renting of immovable property service and construction services.

2. The Revenue contended that the assessee was not entitled to Cenvat credit on general insurance service and rent-a-cab services due to lack of nexus with manufacturing activities. The Tribunal found that general insurance services were for the benefit of employees working in the factory, justifying the credit. Rent-a-cab services were used for transporting employees to and from the factory, deemed as input services based on a precedent from the Hon'ble High Court of Bombay. Consequently, the appeal by the Revenue was dismissed.

3. Regarding the challenge by the assessee on denial of Cenvat credit for renting of immovable property service, the Tribunal noted that the appellant had another unit on rent, making the rent paid and service tax eligible for credit as it was integral to the manufacturing business. Thus, the denial of credit on renting of immovable property service was set aside.

4. The Tribunal addressed the issue of availing Cenvat credit on construction services post 1-4-2011 when it was excluded from the definition under Rule 2(l) of the Cenvat Credit Rules, 2004. Credit post this date was denied, but for the period before 1-4-2011, the assessee was deemed eligible for the credit as it was utilized in the manufacturing business. The matter was remanded to the adjudicating authority for quantification of input services credit to be denied post 1-4-2011, thereby disposing of the appeal filed by the assessee.