2018 (9) TMI 1056 - AT - Central Excise

CENVAT credit - input services - hiring of cabs (Rent-a-Cab Services) - scope of exclusion Clause of the definition of input services - whether the appellants are eligible for credit on Rent-a-Cab Services after 01.04.2011, whereby the exclusion in clause (B) has been introduced in the definition of input services? Held that - From the definition of input services, it can be seen that the services of Rent-a-Cab will not qualify as input service and will not be eligible for credit if the motor vehicle is not a capital good for the service provider. It can be seen from the definition of capital goods that when the motor vehicle which is used for transporting of the passengers or for renting of vehicles, is registered in the name of the service provider, the same would be a capital good for the service provider. Thus, if the motor vehicles are capital goods for the service provider who is providing service of Rent-a-Cab / renting of cabs, then the said services would be eligible for credit. The said fact as to whether these vehicles are capital goods for the service provider requires verification. Appeal allowed by way of remand.

Summary

Issues:
Eligibility of CENVAT Credit on Rent-a-Cab Services under exclusion clause of input services definition post 01.04.2011.

Analysis:
The case involved the appellants engaged in manufacturing crushing and screening machines who availed CENVAT Credit for hiring cabs, specifically Rent-a-Cab Services. The Department contended that such services were not eligible for credit under the exclusion clause of input services definition. The Original Authority confirmed the demand, interest, and penalties, a decision upheld by the Commissioner (Appeals), leading to the current appeal.

The appellant argued that Rent-a-Cab Services were integral to their manufacturing activity, and the lower authorities misinterpreted the exclusion clause, stating that the motor vehicles used were not capital goods for the appellant. They referred to the definition of capital goods and requested a remand to establish that the vehicles were capital goods for the service provider. The Ld. AR supported the findings of the impugned order, stating the services fell within the exclusion clause.

The Tribunal analyzed the definition of input services and capital goods, emphasizing that Rent-a-Cab Services would be eligible for credit if the motor vehicles were capital goods for the service provider. Noting the need for verification on this aspect, the matter was remanded to the adjudicating authority. The Tribunal highlighted errors in the adjudicating authority's reasoning and cited a previous case to support the appellant's position. Ultimately, the Tribunal set aside the impugned order and remanded the appeal for further consideration.

In conclusion, the judgment focused on the interpretation of the exclusion clause regarding Rent-a-Cab Services under the input services definition post 01.04.2011. It emphasized the importance of verifying whether the motor vehicles used for such services qualified as capital goods for the service provider to determine the appellant's eligibility for credit. The decision highlighted errors in the lower authorities' reasoning and provided a detailed analysis based on legal definitions and precedents, ultimately remanding the matter for further examination.