2016 (7) TMI 590 - AT - Central Excise

Eligibility of Cenvat credit on air travel agent and rail travel agents services - Held that - It is clear from the definition that sales promotion is included in the inclusive part of the definition and there is nothing contrary to prove that the services were availed for any personal activity and the appellants had availed the services in the course of their sales promotion which is directly related to the manufacture of the final product. Also guided by the decision of the Hon ble High Court of Bombay in the case of Coca Cola India Ltd, 2009 (8) TMI 50 - BOMBAY HIGH COURT and Good Luck Steel Tubes ltd vs. C C EX, Noida, (2014 (1) TMI 37 - CESTAT NEW DELHI ) wherein it was held that when air travel was performed for the purpose of company business the Service Tax paid on the said air travel agent service is admissible as credit, the same principle is applicable for rail travel agents service also. Therefore, the credit availed on the air travel and rail travel agent service is admissible. - Decided in favour of assessee

Summary

Issues:
1. Denial of Cenvat credit on Air Travel Agent and Rail Travel Agent services for the period April 2005 to December 2010.

Analysis:
The case involved the appellants, manufacturers of pharmaceutical products, who were issued three show cause notices denying Cenvat credit availed on Air Travel Agent and Rail Travel Agent services for the period in question. The adjudicating authority dropped the proceedings initiated in the show cause notices, but the department appealed to the Commissioner (Appeals), who allowed the appeal, leading to the present appeal by the appellants.

During the proceedings, the appellant's counsel argued that the definition of input service during the relevant period was broad, making all business-related activities eligible for credit under the Cenvat Credit Rules, 2004. It was highlighted that the services availed for travel by designated company personnel for sales promotion activities fell under the definition of input service as per Rule 2(l) of the CCR 2004. The counsel relied on various legal precedents to support this argument.

The main issue considered in the appeal was whether the air travel agent and rail travel agent services were eligible for Cenvat credit for the relevant period based on the definition of input service. The definition included services related to sales promotion, and it was established that the services availed were directly related to the manufacture of the final product. The decision referenced legal precedents, such as a case from the Hon'ble High Court of Bombay, to support the admissibility of credit for services used for company business purposes like air and rail travel.

Ultimately, the Tribunal allowed the appeal, restoring the Order in Original and confirming the admissibility of Cenvat credit on the air travel and rail travel agent services. The judgment emphasized that when travel services were utilized for company business purposes, the Service Tax paid on such services was eligible for credit, aligning with legal principles established in previous cases.

This comprehensive analysis of the judgment highlights the interpretation of the relevant legal provisions and precedents to determine the eligibility of Cenvat credit on specific services, providing clarity on the decision reached by the Tribunal.