Whether service tax credit admissible on rent-a-cab utilized for transportation of employees from Vadodara to the factory in village?

PJ/Case law/2013-14/1633

Case:-COMMISSIONER OF C.EX., VARODARA VERSUS SCHOTT GLASS INDIA PVT.LTD.

Citation:-2013(30) S.T.R. 219 (Tri.-Ahmd.)

Brief Facts:-Both the appeals filed by the Revenue and the cross-objections filed by the assessee are on the same issue, but covering different periods and therefore both the appeals and the cross-objections are taken together and final order is being passed. The issue involve whether the assessee is eligible for the benefit of Cenvat credit of Service Tax paid on rent-a-cab utilized for transportation of employees from Vadodara to the factory in village Ankhi, about 40 kms away.

Appellant Contentions:-The respondent submitted that thecredit is not available in view of the decision ofHon'ble Supreme Court in the case of Maruti Suzuki Ltd. - 2009 (240) E.L.T. 641 (S.C.) and the decision of the Tribunal in the case of Sundaram Brake Linings - 2010 (19) S.T.R. 172 (Tri.-Chennai).He submits that there is no nexus with the manufacture and therefore credit is not admissible.

Respondent Contentions:- The Respondent relies upon the decision of the Tribunal in the case of J.K. Cement Works - 2009 (14) S.T.R. 538 (Tri.-Del.) = 2012 (277) E.L.T. 194 (T).

Reasoning of Judgment:-We have considered the submission from both the parties and perused the record, we find that the decision of the Tribunal in the case of J.K. Cement Works (supra) directly covers the issue under consideration. As regards the submissions of the ld. A.R., Tribunal finds that in the case of Ultratech Cement Ltd. - 2010-TIOL-745-HC-MUM-ST = 2010 (260) E.L.T. 369 (Bom.) = 2010 (20) S.T.R. 577 (Bom.), Hon'ble High Court of Mumbai has considered the issue of eligibility of Service Tax paid on various services and Hon'ble High Court has considered the decision of Hon'ble Supreme Court in the case of Maruti Suzuki Limited(supra) also and then came to the conclusion that Cenvat credit benefit will be available if the service can be related to the business of manufacture. In this case, the factory is located in a village and the village does not have adequate facilities for employees and therefore to get the proper employees, it becomes necessary for the assessee to provide transportation facility from the nearest city. Therefore, it cannot be said that the assessee is providing transportation facility to its employees as a welfare measure, but it is necessity to ensure that the manufacture takes place properly. Therefore, in this case, it can be said that the service has a relation to the business of manufacture and has a nexus. As regards the decision in the case of Sundaram Brake Linings(supra), the Hon'ble Member has not considered the decision in the case of Ultratech Cement Ltd.(supra) and therefore it need not necessarily be followed. In view of the observations, Tribunal finds that the Department has not made out a case for rejection of the claim.

Decision:-The appeals filed by the Revenue are rejected.

Comment:-The crux of this case is that Cenvat credit of Service Tax paid on rent-a-cab utilized for transportation of employees from city to factory is admissible as the factory is located in a village and the village does not have adequate facility to its employees and therefore to get the proper employees, it become necessary for the assessee to provide transportation facility from the nearest city. Therefore, it cannot be said that the assessee is providing transportation facility to its employees as a welfare measure, but it is necessity to ensure that the manufacture takes place properly. Thus, it is concluded that the service has a relation to the business of manufacturing and has a nexus and so the credit of the same is admissible.

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PJ/Case law/2013-14/1633

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