2016 (7) TMI 1142 - AT - Central Excise

Cenvat Credit - Input services - whether rent-a-cab services for taking the employees from their residence to the factory and back and also for carrying food for the staff of the company as well as expenses incurred by the company for imparting training to its employees fall in the definition of input services or not? - Held that - As far as rent-a -cab service is concerned, it has been held by the Hon ble High Court of Karnataka in the case of Commissioner of Central Excise Bangalore Vs Stanzen Toyotetzu (P) Ltd 2011 (4) TMI 201 - KARNATAKA HIGH COURT above that rent-a-cab service is an input service and therefore credit is admissible. As far as training to the employees of the company are concerned this is specifically included in the definition of input service as contained in Rule 2 (l) of CENVAT Credit Rules 2004. Therefore in view of the law the impugned order denying benefit of credit on these two services is not sustainable in law and therefore set aside the impugned order by allowing the appeal with consequential relief if any.

Summary

Issues:
- Denial of CENVAT credit on rent-a-cab services, professional services, and convention services
- Interpretation of the definition of input services under CENVAT Credit Rules 2004

Analysis:
The appeal challenged an order dismissing the appellant's appeal and upholding the decision of the Assistant Commissioner to deny CENVAT credit on certain services. The appellant, engaged in manufacturing aircraft/helicopter parts, had taken CENVAT credit on duty of service tax paid on inputs, input services, and capital goods. The Assistant Commissioner issued a show-cause notice seeking to deny service tax credit on specific services, leading to an order-in-original reversing credit, imposing interest, and penalty. The Commissioner (Appeals) confirmed this order, prompting the present appeal. The appellant argued that the services in question fell under the definition of input services, citing relevant case law. The Revenue supported the Commissioner's findings.

The key issue revolved around determining whether rent-a-cab services for transporting employees and carrying food, along with expenses for employee training, qualified as input services. The Judicial Member referred to a Karnataka High Court decision stating that rent-a-cab services constitute an input service, making credit admissible. Additionally, training employees is explicitly included in the definition of input service under Rule 2(l) of CENVAT Credit Rules 2004. Relying on legal precedents, the Judicial Member concluded that the denial of credit on these services was legally unsustainable. Consequently, the impugned order was set aside, allowing the appeal with any necessary consequential relief.

In conclusion, the judgment addressed the denial of CENVAT credit on specific services and the interpretation of the definition of input services under CENVAT Credit Rules 2004. The decision emphasized the admissibility of credit for rent-a-cab services and employee training expenses, highlighting relevant case law to support the ruling.