2015 (6) TMI 19 - AT - Service Tax

CENVAT Credit - air travel, travel insurance, vehicle insurance, vehicle maintenance, mediclaim for employees and CHA services - Held that - Record does not reveal connection of air travel to the service provided nor the travel insurance. So also the vehicle insurance does not exhibit whether that is in any way relate to output service provided. Revenue succeeds on all these three counts. But mediclaim for employees is integrally connected to secure their services to render provision of output service. Thus, Cenvat credit in respect of such services availed is permissible. - As regards CHA, computers imported warranted availing of services of that agent. The computer so imported being used for provision of output service, there should not be denial of Cenvat credit of service tax paid thereon - Decided partly in favour of Revenue.

Summary

Issues: Appeal against Cenvat credit of service tax paid on various services - Air travel, travel insurance, vehicle insurance, vehicle maintenance, mediclaim for employees, and CHA services.

Cenvat Credit on Air Travel, Travel Insurance, and Vehicle Insurance:
The Revenue appealed against the Cenvat credit of service tax paid on air travel, travel insurance, and vehicle insurance, contending that these services were not relevant to the manufacture or provision of any taxable service by the respondent. The Tribunal found that there was no evidence of a connection between air travel, travel insurance, or vehicle insurance with the services provided by the respondent. Therefore, the Revenue succeeded in denying the Cenvat credit for these three services.

Cenvat Credit on Mediclaim for Employees:
The respondent argued that the mediclaim for employees was integrally connected to securing their services to render output service. The Tribunal agreed with this argument, stating that mediclaim for employees was essential for ensuring their availability to provide output services. Consequently, the Cenvat credit for mediclaim for employees was deemed permissible.

Cenvat Credit on CHA Services:
Regarding the CHA services, the respondent explained that the imported computers necessitated the services of a Customs House Agent (CHA). It was clarified that the imported computers were used for providing output services. The Tribunal acknowledged the clear nexus between the input service (CHA services) and the output services provided. Therefore, the Tribunal ruled in favor of the respondent, allowing the Cenvat credit for the service tax paid on CHA services.

Conclusion:
In conclusion, the Revenue's appeal was allowed partly. The Tribunal upheld the denial of Cenvat credit for air travel, travel insurance, and vehicle insurance, as there was no connection established with the services provided. However, the Cenvat credit for mediclaim for employees and CHA services was permitted due to their integral connection with securing employee services and the provision of output services. The stay application was also disposed of in light of the judgment.