2016 (1) TMI 481 - HC - Service Tax

Cenvat Credit - duty paying documents - invoices which did not bear Sl.No. and registration number etc. - service tax paid on input services e.g. (i) repair charges; (ii) repair of company vehicles; (iii) rent a cab services used for transportation of staff/guests - Held that - under the Scheme of Cenvat Credit Rules, 2004, the assessee is entitled to claim the credit on the service tax paid on all those services which the assessee has utilized directly or indirectly in relation to a final product involved in the manufacturing activity. The service tax paid for services of repair, maintenance of company vehicles/rent-a-cab services are in relation to the business activities of the company, which is directly or indirectly involved in the manufacturing activity of the final product, is an input service. As such, the CENVAT credit claimed on these two services namely, service tax paid for repair on Company vehicles and, rent-a-cab services would come within the realm of Rule 3 of Cenvat Credit Rules, 2004 read with Section 66 of the Finance Act, 1994 and thus, the assessee is entitled for the Cenvat credit of service tax paid on the input services. Credit allowed - Decided in favor of assessee.

Summary

Issues:
- Disallowance of input service tax credit on repair charges, repair of company vehicles, and rent a cab services.
- Appeal against the order-in-appeal by the Commissioner of Central Excise.
- Tribunal's decision based on the Division Bench judgment in Stanzen Toyotetsu India case.
- Applicability of Cenvat Credit Rules, 2004 on service tax paid for repair and maintenance of vehicles.
- Challenge to the precedent value of the Stanzen Toyotetsu India judgment.
- Central Government's policy on monetary limit for challenging judgments.
- Binding nature of co-ordinate Bench judgments.

Analysis:
The case involved a dispute over the disallowance of input service tax credit on repair charges, repair of company vehicles, and rent a cab services availed by the respondent. The initial show cause notice demanded recovery of wrongly availed credit, which was later disallowed by the adjudicating authority. The Commissioner of Central Excise allowed the appeal, setting aside the order-in-original. The appellant then appealed to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which dismissed the appeal, leading to the current appeal by the Revenue.

The appellant contended that the Tribunal's decision was based on the Stanzen Toyotetsu India case, which the Revenue did not challenge due to a policy decision of the Central Government regarding monetary limits for challenging judgments. The appellant argued that the Stanzen Toyotetsu India judgment should not have precedent value, and the issue should be reconsidered by the Court. However, the Court found that the CENVAT credit claimed on repair and maintenance of vehicles and rent-a-cab services was valid under the Cenvat Credit Rules, 2004, as they were directly or indirectly related to the manufacturing activity of the final product.

The Court upheld the Tribunal's decision, citing the binding nature of the Division Bench judgment in Stanzen Toyotetsu India case. It rejected the argument that the judgment had no precedent value due to the Central Government's policy decision. The Court emphasized that decisions of the Central Government on challenging judgments do not bind the Courts, and co-ordinate Bench judgments are binding unless referred to a larger Bench. Ultimately, the Court confirmed the Tribunal's order, dismissing the appeal as devoid of merits, as no substantial questions of law arose for consideration.