Cenvat Credit on Rent-a-cab & Tour Operator Service for transporting employees of Factory

PJ/Case Laws/2011-12/1499

Case: C. J. GELATINE PRODUCTS LTD. versus COMMISSIONER OF C.EX. BHOPAL

Citation: 2012 (25) S.T.R 109 (Tri-. Delhi)

Issue:- Cenvat Credit - Rent-a-cab and tour operator service availed for pick up and dropping of staff and officers of factory - whether essential for manufacturing operations -whether covered by the definition of input service and eligible for Cenvat Credit?

Brief Facts:- The Appellant are manufacturers of gelatine chargeable to Central Excise duty. They availed central excise of duty paid on inputs and Service Tax paid on input services used in or in relation to manufacture of their finished products. The point of dispute in this case is as to whether during the period from February, 2005, the Appellant were eligible for Cenvat credit of service tax paid on rent-a-cab service, tour operator service and security the service availed by them. The Jurisdictional Assistant Commissioner holding that these services are not eligible for Cenvat credit denied the Cenvat credit amounting to Rs. 78, 637/- availed in respect of the same and confirmed its demand along with interest and also imposed penalty on them under Rule 15 of the Cenvat Credit Rules, 2004. On appeal to Commissioner (Appeals), the order of the original Adjudicating Authority was upheld. Against this order of the Commissioner (Appeals), the present appeal has been filed.

Appellant’s Contention:- The Appellant pleaded that service of security agency was availed for security of the factory which is essential for the Appellant-unit, that rent-a-cab and tour operator service was availed for pick up and dropping of the staff and officers of the factory, that both the services are essential for manufacturing operations and, hence, the same are activities related to the manufacturing business of the Appellant and covered by the definition of input service, that the Tribunal in the case of C.C.E., Jaipur-II v. J.K. Cement Works reported in 2009 (14) S.T.R. 538 (Tri.-Del.) has held that rent-a-cab service used for bringing employees to the factory and dropping them back to their residence is covered by the definition of input service, and that, in view of this, the impugned order is not correct.

Respondent’s Contention:-The learned Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that the services, in question, have no nexus with the manufacture of the final product and, hence, are not covered by the definition of input service.

Reasoning of Judgment:- The Tribunal held in the case of C.C.E., Jaipur-11 v. J.K. Cement Works (supra) that rent-a-cab service used for bringing the employees to the factory and dropping them back is covered by the definition of input service. Following this judgment of the Tribunal, Tribunal held that the rent-a-cab/tour operator service used by the Appellant for bringing the employees/ workers to the factory and dropping them back is covered by the definition of input service and hence, Cenvat credit would be admissible in respect of the same. As regards the security, there is no dispute that the same has been availed security to the factory. Security service for security of the property of the factory is an essential activity for any manufacturer and so in our view the same is covered by the term "activities related to the business," and therefore, this service would also be covered by the definition of input service and would be eligible for Cenvat credit. In view of the above discussion, the impugned order denying Cenvat credit amounting to Rs. 78,637/- in respect of rent-a-cab/tour operator service and security agency service is not sustainable. The same is set aside.

Decision:- Appeal allowed.

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PJ/Case Laws/2011-12/1499

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