2011 (1) TMI 811 - AT - Service Tax

Tribunal allows some credits, denies others in Cenvat case, emphasizing business relevance and documentation clarity.

IDEA CELLULAR LTD. Versus COMMISSIONER OF C. EX., MEERUT-I

The Tribunal overturned the Commissioner's decision to deny Cenvat credit for insurance services covering vehicles, laptop, and cash transit, catering ... Mobile tele communication service - Cenvat credit of input services - service of insurance for the valuables and the transit of cash from the collection centres to the bank - any prudent businessman will arrange the insurance for the same and hence this service has to be treated as activity relating to business and earlier the Tribunal in the case of Monnet Ispat & Energy Ltd. v. CCE, Raipur (2009 -TMI - 77270 - CESTAT, NEW DELHI) and CCE, Raipur v. Raipur Rotocast Ltd. (2009 -TMI - 75941 - CESTAT, NEW DELHI) has also taken the same view holding that the service of insurance of machinery, capital goods and cash in transit is covered by the definition of input service - Decided in favour of assessee.As regards the service of customer care and attending to customers’ complaints - this service is squarely covered the term activities related to business.-Decided in favour of assessee.As regards employee welfare expenses - this credit has been taken on the basis of the invoice of M/s Chitra Pal Audio Private Ltd. and the invoice indicates supply of audio visual equipment. Invoice dees not indicate whether the invoice is for service or is for sale of the goods - Decided against the assessee.As regards, the service of outdoor catering - Bombay High Court in the case of The CCE, Nagpur v. Ultratech Cement Ltd. and Ors. (2010 -TMI - 78203 - BOMBAY HIGH COURT) has held that the service of outdoor caterer is integrally connected with the business of the manufacturing of final product, on going through the invoices of the service provider it is seen that the invoices do not even indicate the payment of any service tax and the invoices appear to be just for supply of food and drinks - Decided in favour of assessee. Issues:1. Cenvat credit for insurance of vehicles, laptop, and cash transit2. Cenvat credit for catering services3. Cenvat credit for customer care services4. Cenvat credit for mandap keeper services5. Cenvat credit for audio-video equipment for employee welfare6. Penalty under Rule 15 of the Cenvat Credit Rules, 2004Analysis:1. The first issue involves the denial of Cenvat credit for insurance services covering vehicles, laptop, and cash transit. The appellant argued that such insurance is essential for any prudent businessman and is related to their business activities. The Tribunal cited previous judgments supporting the inclusion of insurance services as input services. The Commissioner's decision to deny the credit was overturned.2. The second issue pertains to the denial of Cenvat credit for catering services. The appellant contended that catering services for staff were essential to business operations and should be eligible for credit. However, the Tribunal upheld the denial of credit as the invoices did not show the payment of service tax, indicating that the services were merely for food and drinks.3. The third issue involves the eligibility of customer care services for Cenvat credit. The appellant argued that customer care services are crucial for telecom service providers and are directly related to business activities. The Tribunal agreed with the appellant, overturning the Commissioner's decision to deny the credit.4. The fourth issue concerns the denial of Cenvat credit for mandap keeper services used for staff training. The appellant argued that these services were essential for business activities, but the Commissioner denied the credit without sufficient reasoning. The Tribunal overturned this decision, stating that the services were indeed related to business activities.5. The fifth issue revolves around the Cenvat credit for audio-video equipment used for employee welfare. The Tribunal found that the invoice did not specify whether the transaction was for services or goods, leading to the denial of credit based on lack of clarity.6. Finally, the issue of penalties under Rule 15 of the Cenvat Credit Rules, 2004 was addressed. The Tribunal upheld the penalties imposed for incorrect Cenvat credit claims, stating that penalties were justified in such cases. The appeal was disposed of accordingly, with some credits being allowed and others denied based on the detailed analysis of each issue.