2009 (8) TMI 372 - AT - Service Tax

Cenvat Credit-Input service- The assessee, an aircraft operator, availed credit of service tax paid/ reimbursed to airport authority of India for availing of the services of authority such as landing, parking and x-ray in connection with the operation of the aircraft owned by it. The lower authorities denied said credit on the ground that the services were not connected, directly and indirectly, in or in relation to the manufacture of final products and clearance of final products. In the light of the judgment of Force Motor Ltd. v CCE, held that-the aircraft was not used for business activities, any service tax paid on the services rendered by the authority on such aircraft need to be allowed as credit to the assessee. The appeal is allowed.

Summary

Issues:
- Entitlement to Cenvat credit for service tax paid/reimbursed to Airport Authority of India for aircraft operation services.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai was filed against the order-in-appeal passed by the Commissioner (Appeals), Central Excise, Pune. The primary issue in question was whether the appellant is entitled to avail Cenvat credit for the service tax paid/reimbursed to the Airport Authority of India for utilizing their services in connection with the operation of the appellant's aircraft. The appellant had availed service tax credit for services such as landing, parking, and X-ray provided by the Airport Authority of India. The appellant contended that these services were used in connection with the operation of their aircraft. The Tribunal noted that previous show-cause notices on the same issue had resulted in some decisions in favor of the appellant, and the appellant sought similar relief in this case.

The appellant's counsel argued that the services in question were essential for business purposes as the aircraft was used by the company's officials for conveyance between their plants. The counsel emphasized that these services were directly related to the business activities of the appellant. On the other hand, the department's representative contended that the services were not directly or indirectly linked to any manufacturing activity or clearance of final products, citing relevant legal provisions and a previous case where Cenvat credit was denied for similar reasons.

After examining the definitions and legal provisions, the Tribunal found that the services provided by the Airport Authority of India could be considered part of the appellant's business activities. The Tribunal highlighted that the definition of input services includes activities related to business, and the services in question were essential for the appellant's business operations. It was noted that the appellant had used the aircraft for business activities, a fact not disputed by the department. The Tribunal emphasized that the definition of input services should be interpreted broadly, and activities related to business, even if not explicitly listed, could be covered under the definition.

Based on the above analysis, the Tribunal allowed the appeal, granting consequential relief to the appellant. The decision was grounded in the interpretation of the Cenvat Credit Rules and the acknowledgment that the services provided by the Airport Authority of India were integral to the appellant's business operations, making them eligible for Cenvat credit.