2019 (11) TMI 483 - AT - Service Tax

CENVAT Credit - capital goods - credit denied on motor vehicles used by them for providing these services on the ground that motor vehicles are not entitled for capital goods CENVAT Credit except in respect of some services - It is a case of the Revenue that the motor vehicles of which the appellant has availed CENVAT Credit were not used for any of these services but were used for Port services which is their main service. HELD THAT - When a SCN was issued, the burden of proving facts and allegations in the show cause notice rests on the department and not on the noticee. Apart from this, it would stand to reason that the motor vehicles would be used for cargo handling as well as for other services within port. Having bought motor vehicles it is unlikely that the appellant would use exclusively them for one service and not for the other - As long as the appellant has used motor vehicles for rendering Cargo Handling Services on which they have paid service tax, they are entitled to CENVAT Credit on capital goods. The motor vehicles need not be used exclusively for providing cargo handling or other listed services. The mere fact that they have also used motor vehicles for some other purposes does not deprive them of their CENVAT Credit on motor vehicles. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of CENVAT Credit on motor vehicles used for providing services
- Interpretation of the definition of "capital goods" under Rule 2(B) of CCR 2004
- Burden of proof in show cause notice issuance

Analysis:
1. The appellant, a service provider registered with the Service Tax Department, appealed against the denial of CENVAT Credit on motor vehicles used for services like Cargo Handling, Port Services, etc. The Revenue contended that the vehicles were not used for eligible services, leading to the disallowance of the credit.

2. The relevant issue revolved around the interpretation of the definition of "capital goods" under Rule 2(B) of CCR 2004, specifically concerning motor vehicles. The appellant argued that their activities fell under the specified services allowing for CENVAT Credit on the vehicles, while the Revenue maintained that the vehicles were primarily used for Port services, not Cargo Handling.

3. The burden of proof in a show cause notice was a crucial aspect of the case. The appellant demonstrated that they had paid service tax under various heads, including Cargo Handling and Port Services. The department failed to provide evidence that the vehicles were not used for Cargo Handling, shifting the burden of proof onto them.

4. After considering both parties' arguments and reviewing the records, the Tribunal found that the appellant had indeed used the motor vehicles for rendering services on which they paid service tax. The Tribunal emphasized that the vehicles need not be exclusively used for one service and that using them for multiple services did not disqualify them from CENVAT Credit eligibility.

5. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting consequential reliefs to the appellant. The decision highlighted the importance of substantiating claims made in show cause notices and upheld the appellant's right to claim CENVAT Credit on motor vehicles used for providing taxable services.