2016 (9) TMI 289 - AT - Service Tax

Demand of tax with interest - Rule 14 of CCR read with Section 73 of the Finance Act - imposition of penalty - Rule 14 (3) of CCR 2004 - CENVAT credit input service - Outdoor catering - Car Hiring Services - Electricity Charges - Rule 2(l) of Cenvat Credit Rules, 2004 business support services Held that - To deny credit on these three impugned service, reliance was placed on the judgement of the Supreme Court in the case of Maruti Suzuki Ltd. Vs CCE Delhi, Sundram Brake Linings & Others Vs CCE and Vandana Global Ltd. Vs CCE. The decision in the case of Maruti Suzuki Ltd. is no longer good law in view of Hon ble Supreme Court s decision in the case of Ramala Sahkari Chini Mills Ltd. Vs CCE Meerut-I - 2016 (2) TMI 902 - SUPREME COURT. The Tribunal s ruling in Sundaram Brake Linings & Others Vs CCE stands overruled by the Hon ble Madras High Court in their own case reported in 2016 2015 (3) TMI 736 - MADRAS HIGH COURT (Mad.). The ratio laid down by Tribunal s LB in the case of Vandana Global would have no application to the facts of the present case as that was a case dealing with eligibility of cenvat credit on supporting structures appeal allowed decided in favor of appellant.

Summary

Issues Involved:
Eligibility of input service credit under Rule 2(l) of Cenvat Credit Rules, 2004 for various input services used by the appellant in providing output services during April 2009 to March 2010.

Analysis:
1. The appellant, engaged in providing 'Business Support Service,' availed cenvat credit on multiple input services, including insurance charges, travel expenses, staff welfare expenses, car hire charges, electricity charges, delegate fee, and training expenses. A show cause notice was issued questioning the eligibility of input services under Rule 2(l) of CCR 2004. The adjudicating authority confirmed the demand, leading to an appeal by the appellant before the Commissioner (Appeals).

2. The appellant challenged the rejection of the appeal on input services like outdoor catering, car hiring services, and electricity charges. The appellant's counsel argued that the issue was settled based on judicial pronouncements, citing cases like CCE & ST Vs Lupin Ltd., CCE Chennai-III Vs Visteon Powertrain Control Systems, and CCE Nagpur Vs Ultratech Cement Ltd. The Tribunal's decision in Mount Kellett Management (I) Pvt. Ltd. Vs CST Mumbai was also referenced.

3. The Commissioner (Appeals) partially allowed the appeal, granting relief on four services but rejecting three input services. The appellant's counsel contended that all input services were availed before the amendment to Rule 2(l) of CCR 2004 on April 1, 2011. The impugned services were scrutinized based on their nexus to the output service provided by the appellant.

4. The Commissioner (Appeals) denied credit on outdoor catering, car hire service, and electricity charges, stating a lack of direct nexus with the output service. However, the Tribunal disagreed, citing legal precedents that overruled previous judgments. The Tribunal held that the appellant was entitled to input service credit on the disputed services, modifying the impugned order accordingly.

5. The Tribunal's decision highlighted the settled legal position on the applicability of Rule 2(l) of CCR 2004 for the impugned services, allowing the appellant's appeal on outdoor catering service, car hire service, and electricity charges. The judgment was pronounced in open court on June 24, 2016.

By thoroughly analyzing the eligibility of input service credit under Rule 2(l) of Cenvat Credit Rules, 2004 for various input services used by the appellant, the Tribunal concluded in favor of the appellant, allowing the appeal on disputed services and modifying the impugned order accordingly.