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2018 (6) TMI 180 - AT - Central ExciseDemand of Interest and Penalty - availment of cenvat credit on the input service viz. rent-a-cab service - reversal of irregularly availed CENVAT credit - input services - rent-a-cab services - Held that - On going through the definition of input service and exclusion provided therein, it is found that the rent-a-cab service is excluded only in a case where the motor vehicle used by the service provider is not a capital goods for them - In the present case, the vehicle is owned by the service provider who has given the vehicle on rent to the appellant. Therefore, the motor vehicle which is given on rent is a capital goods for the service provider. Therefore, the rent of motor vehicle does not fall under the exclusion clause provided in the definition of input service. The demand which was confirmed by the original authority, shall stand maintained as the appellant has not challenged the demand against the original order before the Commissioner (Appeals), but legally the cenvat credit is admissible on input service viz. rent-a-cab. In this position, demanding interest and penalty will be unjustified, even though the demand attained finality - demand of interest and penalty set aside. Appeal allowed - decided in favor of appellant.
Issues involved:
1. Liability for interest and penalty on availment of cenvat credit on rent-a-cab service. 2. Challenge of penalty and interest by the appellant. 3. Interpretation of the definition of input service in relation to rent-a-cab service. 4. Applicability of budgetary changes regarding rent-a-cab service as an input service. 5. Admissibility of cenvat credit on rent-a-cab service. Analysis: Issue 1: The appellant's liability for interest and penalty on cenvat credit. The appellant did not contest the demand due to the reversal of cenvat credit amount. The original authority imposed a penalty but dropped the interest. The Commissioner (Appeals) reduced the penalty to 25% and ordered payment of interest before 1.4.2012. The appellant challenges the penalty and interest up to 1.4.2012. Issue 2: The appellant's challenge of the penalty and interest. The appellant argues that the demand was not sustainable as they were entitled to cenvat credit for rent-a-cab service. The appellant relies on previous Tribunal judgments to support their claim that interest and penalty are not chargeable if the tax is not payable. Issue 3: Interpretation of the definition of input service for rent-a-cab service. The appellant contends that rent-a-cab service qualifies as an input service as the rented vehicles are capital goods for the service provider. The Tribunal's previous judgments are cited to support this argument. Issue 4: Applicability of budgetary changes regarding rent-a-cab service. The Revenue argues that rent-a-cab service is excluded from the definition of input service effective from 1.4.2011. The Revenue cites a Tribunal judgment and budgetary changes to support their position. Issue 5: Admissibility of cenvat credit on rent-a-cab service. The Tribunal examines whether rent-a-cab service qualifies as an input service based on the ownership of the vehicles and their classification as capital goods. The Tribunal concludes that rent-a-cab service constitutes an input service for the appellant, setting aside the penalty and interest as unjustified. In the final judgment, the Tribunal allows the appeal, setting aside the penalty and interest, as the demand for cenvat credit on rent-a-cab service was found to be admissible based on the ownership and classification of the vehicles. The decision is pronounced in court, disposing of the matter accordingly.
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