Appellant Granted Credit for Staff Transportation Services under Cenvat Credit Rules

The Tribunal allowed the appeal in favor of the appellant, granting them the credit of service tax paid on transportation of staff to the workplace. The Tribunal relied on precedents from the High Courts of Punjab & Haryana and Karnataka, establishing that such transportation services qualify as input services under the Cenvat Credit Rules, 2004. The decision overturned the Commissioner's disallowance of credit and penalty imposition, providing the appellant with the relief sought.

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Issues:
1. Entitlement to avail credit of service tax paid on transportation of staff to the workplace.

Analysis:
The main issue in this appeal is whether the appellant is entitled to avail credit of service tax paid on transportation of staff to the workplace. Initially, the Deputy Commissioner dropped the proceedings against the appellant, considering the said services as covered under the definition of input services as per Rule 2(1) of Cenvat Credit Rules, 2004. However, the Commissioner reviewed this decision and disallowed the credit amount of Rs.39,777/-, imposing a penalty of Rs.5,000/- under Rule 15(3) of the same rules, leading to the current appeal.

In the judgment, the Tribunal referred to a decision by the Hon'ble High Court of Punjab & Haryana in the case of CCE, Chandigarh-II vs. Federal Mogul Goetze (India) Ltd., where it was held that the service of transportation of employees to the factory qualifies as an input service under Rule 2(1) of Cenvat Credit Rules, 2004. Additionally, the Tribunal cited a ruling by the Hon'ble Karnataka High Court in the case of CCE, Bangalore-III vs. Stanzen Toyotetsu India (P) Ltd., which emphasized that rent-a-cab services for transporting workers to the factory premises directly impact the manufacturing activity and thus are considered an input service eligible for credit. Based on these precedents, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant, granting them the consequential relief.

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