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2021 (12) TMI 1047 - HC - Central ExciseCENVAT Credit - input service - transportation of employees by a manufacturer from their designated pick up points to their workplace by Bus - service for personal use or consumption of any of the employees - activity of providing bus transport services to its employees at the cost of the Manufacturer to reach factory in time and the expenses incurred by the Manufacturer in providing such service (which amount is taken into consideration while determining the final price of the product) - renting of motor vehicle which is Capital Goods for Service Provider - HELD THAT - Considering the effect of definition of input service after 01.04.2011 it was found that establishment of such canteen was primarily for personal use or consumption of the employees and after such amendment no cenvat credit could be availed. This view has been upheld by the Hon ble Supreme Court in TOYOTA KIRLOSKAR MOTOR PRIVATE LIMITED VERSUS THE COMMISSIONER OF CENTRAL TAX 2021 (12) TMI 420 - SC ORDER while dismissing the Special Leave Petition on 18.11.2021 preferred by the said appellant - The facts of the present case also indicate that the facility of transportation provided by the appellant to its employees was merely in the nature of service for personal use or consumption of its employees. The decisions relied upon by the learned counsel for the appellant are clearly distinguishable. In THE PRINCIPAL COMMISSIONER VERSUS M/S. ESSAR OIL LTD. 2015 (12) TMI 1062 - GUJARAT HIGH COURT there was no dispute by the Department in that case that the services consumed by an assessee were related to various stages of its manufacturing and business activities. The same is not the case herein. The Tribunal did not commit any error whatsoever in disallowing cenvat credit to the appellant after 01.04.2011 in view of the amended provisions. The service provided was mere in the nature of personal service to its employees which is not permitted to be treated as input service - the substantial questions of law as framed are answered against the appellant - Appeal dismissed.
Issues:
I. Interpretation of exclusion in Rule 2(1) of Cenvat Credit Rules, 2004 for transportation of employees by a manufacturer. II. Determining whether transportation services provided by a manufacturer for its employees constitute personal use or consumption. III. Assessing if providing bus transport services to employees can be considered a component leading to manufacturing activity for Cenvat Credit. IV. Entitlement of recipient of services to claim Cenvat Credit of Service Tax for renting motor vehicles. Issue I: Interpretation of Exclusion in Rule 2(1) of Cenvat Credit Rules, 2004 The appellant, engaged in manufacturing explosives, provided transportation services for its employees from Nagpur to the factory, seeking Cenvat Credit. The Adjudicating Authority disallowed credit post-amendment in 2011, citing exclusion of services primarily for personal use. The appellant contended that transportation was essential for manufacturing activity, citing precedents. The respondent argued that transportation from a distance of 40 kms did not relate to manufacturing. The Tribunal upheld the disallowance, stating that post-amendment, rent-a-cab services were excluded, and transportation for personal convenience did not qualify as an input service. Issue II: Classification of Transportation Services as Personal Use or Consumption The appellant argued that transportation was crucial for manufacturing, not personal use, relying on precedents. However, the respondent contended that post-amendment, transportation did not qualify as an input service. The Tribunal found the transportation provided was for personal use or consumption of employees, akin to the provision of food and beverages in another case, leading to disallowance of Cenvat Credit. Issue III: Bus Transport Services as Component of Manufacturing Activity The appellant asserted that transportation was integral to manufacturing, emphasizing its necessity. Contrarily, the respondent highlighted the exclusion post-amendment and cited legal precedents. The Tribunal supported the disallowance, stating the service was personal in nature, not related to manufacturing, akin to a canteen service for personal use. Issue IV: Entitlement to Claim Cenvat Credit for Renting Motor Vehicles The appellant sought Cenvat Credit for renting motor vehicles, contending it was a capital good for the service provider. The respondent argued against the claim, citing legal precedents. The Tribunal upheld the disallowance, emphasizing the exclusion of rent-a-cab services post-amendment. In conclusion, the Tribunal upheld the disallowance of Cenvat Credit post-amendment, deeming the transportation services as personal in nature and not integral to the manufacturing activity. The appellant's contentions were refuted based on the amended provisions, leading to the dismissal of the appeal.
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