2018 (4) TMI 467 - AT - Central Excise

CENVAT credit - rent-a-cab service - emergency response vehicles - jurisdictional service tax authorities were of the opinion that these are rent-a-cab service which, as per rule 2(l) of CENVAT Credit Rules, 2004 was incorporated on 1st April 2011 was ineligible for availment. Held that - The emergency response vehicles are also not intended to carry passengers on hire and, even if the distinction between hire and renting is ignored, it is clear that the service availed by the appellant is not that of rent-a-cab - disallowance of credit will not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of CENVAT credit on tax discharged for emergency response vehicles sourced by the appellant.
2. Classification of the service availed as 'rent-a-cab service' for tax purposes.

Analysis:
1. The appellant, a manufacturer of 'compressed natural gas,' sourced emergency response vehicles for safety requirements. The tax authorities disallowed CENVAT credit on the tax paid for these vehicles, treating it as 'rent-a-cab service' post-April 2011. The original authority upheld the demand, imposing penalties. The appellant challenged this, arguing that the vehicles were not for carrying passengers but for safety compliance. They cited Tribunal decisions to support their stance.

2. The appellant contended that the service was not 'rent-a-cab' as the vehicles were specially configured for safety, not passenger transport. They highlighted the contractual differences between hiring and renting, relying on legal precedents. The Authorized Representative, however, referenced a Tribunal decision equating 'hiring' and 'renting,' suggesting no exclusion from 'rent-a-cab' taxation based on terminology alone.

3. The Tribunal analyzed the concept of 'rent-a-cab service,' noting its intent to tax under the Motor Vehicles Act, 1988. Referring to legal precedents, the Tribunal differentiated between hiring vehicles and providing 'rent-a-cab service.' It emphasized that emergency response vehicles, like ambulances, were not for passenger hire, thus not falling under 'rent-a-cab service.' The Tribunal set aside the impugned order, allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, overturning the disallowance of CENVAT credit and duty recovery. The judgment clarified the distinction between services like 'rent-a-cab' and specialized vehicle hiring for safety compliance, emphasizing the specific purpose of the vehicles in question.