2017 (6) TMI 1165 - AT - Service Tax

Tribunal Upholds Cenvat Credit for Exporting Services

The Tribunal dismissed the appeal, upholding the decision of the Ld. Commissioner (A) to allow cenvat credit on services like Rent a Cab, Asset Insurance, ... CENVAT credit - export of services - input services - Rent a Cab, Asset Insurance, Health Insurance and Professional Indemnity Insurance - Held that: - the Honble High Court of Bombay in the case of Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] has held that any services availed by the assessee who is provider of output service is entitled to avail cenvat credit on the services used for their business of providing output service - Further, as per CBEC Circular No. 943/04/2011-CE dated 29.04.2011, which has been clarified that the services availed prior to 01.04.2011, cenvat credit is available to the assessee - credit allowed - appeal dismissed - decided against Revenue. Issues:Appeal against denial of cenvat credit on services like Rent a Cab, Asset Insurance, Health Insurance, and Professional Indemnity Insurance for export of services.Analysis:The appeal before the Appellate Tribunal CESTAT, CHANDIGARH involved a dispute regarding the denial of cenvat credit on services utilized for exporting services, including Rent a Cab, Asset Insurance, Health Insurance, and Professional Indemnity Insurance. The Revenue contended that these services did not qualify as input services under Rule 2(l) of the Cenvat Credit Rules, 2004, and thus, cenvat credit should not be allowed. Show cause notices were issued, leading to the imposition of penalties and demands by the adjudicating authority. Subsequently, the respondent challenged this decision before the Ld. Commissioner (A), who allowed the cenvat credit based on judicial pronouncements. The Revenue appealed this decision before the Tribunal.Upon hearing both sides and examining the records, the Judicial Member noted that the appeal was filed despite the Ministry of Finance's litigation policy, which discourages appeals for amounts less than Rs. 10 lakhs and non-classification/refund issues. In this case, the issue did not involve classification/refund, and the amount was below Rs. 10 lakhs. The Judicial Member criticized the Revenue for burdening the Tribunal with a frivolous appeal contrary to the litigation policy.Regarding the merits of the case, it was established that the services in question were indeed utilized by the respondent for their business of exporting services between 2006 to 2011. Citing a judgment by the Hon'ble High Court of Bombay and a CBEC Circular, it was clarified that cenvat credit is permissible for services used in providing output services. The Circular specifically allowed cenvat credit for services availed before April 1, 2011. Consequently, the Ld. Commissioner (A) was deemed correct in granting cenvat credit to the respondent based on these legal principles.In conclusion, the Tribunal dismissed the appeal, upholding the decision of the Ld. Commissioner (A) to allow cenvat credit on the services in question. The appeal was deemed meritless, and the impugned order was upheld in favor of the respondent.