2016 (11) TMI 244 - AT - Service Tax

Recovery of the inadmissible credit - Input Services - Rent a Cab - Cleaning Services - Held that - Rent- a- Cab and Cleaning Services are Input Services as defined under Rule 2(l) of the Cenvat Credit Rules 2004 in view of the judgment of this Tribunal in the case of Hindustan Zinc Ltd vs CCE, Jaipur 2012 (12) TMI 228 - CESTAT NEW DELHI and also the cleaning services are incurred in cleaning the Telephone exchanges for providing the telephone service, hence eligible to credit. Utilisation of credit - Rule 6(3)(c) of CCR,2004 - Held that - I find that the the Ld. Commissioner (Appeals) has rightly held that the respondents are eligible to utilize 20% of the CENVAT credit as laid down under Rule 6(3)(c) of CCR,2004 and reduced the liability; also dropped the penalty keeping in view the circumstance of the case. Thus, I do not find any discrepancy in the above order. The impugned order upheld - Appeal dismissed - decided against Revenue.

Summary

Issues:
- Whether 'Rent a Cab' and 'Cleaning Services' qualify as Input Services under Rule 2(l) of the Cenvat Credit Rules 2004?
- Whether the respondents utilized Cenvat Credit in contravention of Rule 6(3)(c) of Cenvat Credit Rules 2004?
- Whether the penalty imposed on the respondents is justified?

Analysis:
1. Qualification of 'Rent a Cab' and 'Cleaning Services' as Input Services:
The Revenue contended that these services do not meet the definition of Input Service. However, the appellant argued that these services fall under the scope of Input Service, citing a previous Tribunal judgment. The Member (Judicial) found that both 'Rent a Cab' and 'Cleaning Services' qualify as Input Services under Rule 2(l) of the Cenvat Credit Rules 2004. The cleaning services were deemed eligible as they were incurred in cleaning the Telephone exchanges for providing the telephone service. The judgment of Hindustan Zinc Ltd.'s case was referenced to support this conclusion.

2. Utilization of Cenvat Credit in Contravention of Rule 6(3)(c):
The Revenue alleged that the respondents exceeded the permissible limit of utilizing Cenvat Credit as per Rule 6(3)(c) of Cenvat Credit Rules 2004. The Ld Commissioner (Appeals) had allowed the utilization of 20% of the CENVAT credit, in compliance with the said rule. The Member (Judicial) upheld this decision, finding no discrepancy in the order. Therefore, the respondents were deemed eligible to utilize 20% of the CENVAT credit as per the rule, and the liability was appropriately reduced.

3. Justification of Penalty Imposed:
The Revenue raised concerns regarding the penalty dropped against the respondents by the Ld Commissioner (Appeals). The Ld CA for the appellant argued that the penalty was rightly dropped. The Member (Judicial) agreed with the Ld Commissioner (Appeals)'s decision, considering the circumstances of the case. Consequently, the penalty imposed on the respondents was deemed unjustified, and the impugned order upholding the decision to drop the penalty was maintained.

In conclusion, the Appellate Tribunal CESTAT AHMEDABAD, through the judgment delivered by Dr. D.M. Misra, Member (Judicial), dismissed the Revenue's appeals. The decision affirmed that 'Rent a Cab' and 'Cleaning Services' qualify as Input Services under the Cenvat Credit Rules 2004, upheld the utilization of 20% of CENVAT credit by the respondents, and justified the dropping of the penalty against them.