CENVAT credit on business travel, vehicle upkeep and staff telephone lines was allowed, and the penalty fell away.

CENVAT credit was held admissible on service tax paid for passenger air fare, company vehicle servicing and insurance, and residential telephone lines of staff because each input service was linked to business use and no personal use was alleged. Air travel for company work qualified as creditable input service, vehicle servicing and insurance were treated as connected with manufacture of final products, and staff telephone lines were allowed on the same business-use basis. As the credit claims were upheld across all three categories, the penalty under Rule 15 of the CENVAT Credit Rules was not sustained.

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Issues: Whether CENVAT credit was admissible on service tax paid on passenger air fare, servicing and insurance charges of company vehicle, and residential telephone lines of staff, and whether the penalty under Rule 15 of the CENVAT Credit Rules was liable to be sustained.

Analysis: Credit on air travel was held admissible where the travel was undertaken for company business and there was no allegation of personal use. Service tax paid on servicing and insurance charges of company vehicle was treated as relating to the manufacture of final products. Credit on residential telephone lines of staff was also allowed as there was no case of personal use by the officials. Since the credit claims were upheld, the penalty imposed under Rule 15 did not survive.

Conclusion: The credit was held admissible on all three categories of services, and the penalty was not sustained.

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