2014 (1) TMI 405 - AT - Service Tax

Waiver of pre-deposit - Availment of CENVAT Credit - Credit taken on Insurance, Air Fare/Air Tickets, Taxi/Car Hiring, Insurance Charges, Maintenance and Repair Charges - Held that - Cenvat credit of Service Tax paid on the services availed by the appellant on Air Fares/Air Tickets and Taxi/Car Hiring, Insurance Charges, Maintenance and Repair Charges was in respect of the expenses incurred by them for the logistical purposes of the appellants work is for business purposes. This specific plea has been taken by the appellant before both the lower authorities but they have not addressed to this plea in proper perspective. As regards the Service Tax paid on insurance charges, it is seen that the insurance was taken for various stocks lying in different branches and insurance has been taken to protect the assets from fire, theft and also from other damages - Service Tax paid on the above mentioned services are in relation to the business of the assessee - insurance charges paid on the services are in relation to the business of the assessee and Cenvat credit of Service Tax paid on the services cannot be disallowed - Following decision of Stanzen Toyotetsu India Pvt. Ltd. 2008 (12) TMI 118 - CESTAT BANGLORE - Stay granted.

Summary

Issues:
1. Eligibility of Cenvat credit on specific services under Cenvat Credit Rules, 2004.

Analysis:
The case involved a stay petition seeking waiver of pre-deposit for certain amounts, including ineligible Cenvat credit, interest, and penalty under the Cenvat Credit Rules, 2004. The primary issue revolved around the ineligibility of Cenvat credit on services such as Insurance, Air Fare/Air Tickets, Taxi/Car Hiring, Insurance Charges, Maintenance, and Repair Charges. The lower authority had deemed the Service Tax paid on these services as ineligible, citing non-alignment with the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004.

During the proceedings, the appellant's advocate argued that the services in question were utilized in relation to the appellant's business activities. The Departmental Representative, on the other hand, reiterated the findings of the Commissioner (Appeals) and highlighted a relevant case law. After considering the submissions from both sides, the Member found that the Cenvat credit on the services like Air Fares/Air Tickets, Taxi/Car Hiring, Insurance Charges, Maintenance, and Repair Charges was indeed related to the business operations of the appellant. The Member noted that the lower authorities had not adequately addressed the appellant's argument regarding the business purpose of these services.

The Member referred to a precedent set by a two-Member Bench of the Tribunal in a similar case, where it was held that insurance charges paid on services are considered to be in relation to the business of the assessee, and therefore, the Cenvat credit of Service Tax paid on such services cannot be disallowed. Consequently, the Member concluded that the appellant had established a case for waiving the pre-deposit requirement for the amounts in question. The application for waiver of pre-deposit of Cenvat credit demand, interest, and penalty was allowed, and the recovery was stayed pending the appeal's disposal.