Admissibility of Credit on 'rent-a-cab service' and 'air travel agent's service'.

PJ/Case law/2013-14/1898

Case: - EMCON TECHNNOLOGIES INDIA PVT. LTD. VERSUS COMMR. OF C. EX., BANGALORE

Citation:- 2013 (31) S.T.R. 441 (Tri.- Bang.)

Brief facts:- It is the claim of the appellant that they used 'rent-a-cab service' for transportation of their employees between the factory and pre-fixed points away from it. Further it is submitted that 'air travel agent's service' were availed to enable the company's executive to undertake air travels for business purposes. It is argued by the learned consultant for the appellant that both the services had a direct nexus with the appellant's business activity and hence they should be recognized as "input services" defined under Rule 2(I) of the Cenvat Credit Rules, 2004. In relation to 'air travel agent's service, the learned consultant relied on Commissioner of Central Excise, Tirunelveli v. DCW [2011 (22) S.T.R. 214 (Tri.-Chennai)]. He also submits that the original authority has allowed Cenvat credit on 'rent-a-cab service' and 'air travel agent's service' for certain other periods viz January to October 2008, January to September 2010 and October 2010 to March 2011. He has also produced copies of the relevant orders-in-original viz. Order-in-Original Nos. 13 tor 15/2012, dated 2-9-2012.

Appellant’s Contention:- It is argued by the learned consultant for the appellant that both the services had a direct nexus with the appellant's business activity and hence they should be recognized as "input services" defined under Rule 2(I) of the Cenvat Credit Rules, 2004.

Respondent’s Contention:- The Respondent submitted that there is no evidence of the 'rent-a-cab service' having been used for transportation of employees in the aforesaid manner nor of 'air travel agent's service' having been used by executive of the company for business purposes. With reference to the order-in-original relied on by the learned Consultant, the learned Superintendent (AR) submits that these orders are amenable to review in the department are hence cannot be given any precedential value at this stage.

Reasoning of Judgment:- After hearing both the sides and perusing the record made by both sides, it was concluded that it was not the case of the department in the relevant show-cause notice that 'rent-a-cab service' not used for transportation of employees or that 'air travel agent's service' not availed by the company's executives for undertaking business travels. The case of the Revenue as made out in the show-cause notice was that the two services did not qualify to be input services for the purpose of Cenvat credit. If the 'rent-a-cab service' was used by the company for transporting their employees between the factory and their residential locations, the requisite nexus exists between the service and the manufacture of excisable goods in the factory. Similarly, if the air travels were undertaken by the company, executives for business purposes, the necessary nexus between the service and the business activities the appellant does exist. The show-cause notice did not even attempt to make out, a case to the contra. Therefore, the case of the appellant is liable to be accepted. With regard to 'air travel service' the appellant also receives support from the Tribunal's decision in the case of DCW LW. (supra). The orders-in-original produced by the Consultant for the appellant can be no basis for taking a view in their favour in as much as ample time is left for the department to review those orders. For the aforesaid reasons, this appeal is allowed.

Decision:- Appeal Allowed.

Comment:- The cenvat credit of rent a cab services and air travel agent services is admissible as far as their nexus with the manufacture of excisable goods has been established by the appellant. However, presently, there is specific restriction in availing the credit of service tax paid on rent a cab services.

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PJ/Case law/2013-14/1898

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