Cenvat credit on rent-a-cab services: unofficial use was treated as ineligible, with partial pre-deposit and stay granted.

Cenvat credit on rent-a-cab services was disputed where the vehicles were allegedly used not only for employees but also for family members and unofficial purposes. The Tribunal observed that, prima facie, trips for unofficial work would not qualify for Cenvat credit under the Cenvat Credit Rules, 2004. As the matter required detailed examination at the appeal stage, it imposed a partial deposit condition for hearing of the appeals and granted interim protection for the remaining demand. Upon deposit of the specified amount within the prescribed time, waiver of pre-deposit of the balance and stay of recovery were to operate until disposal of the appeals.

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Issues: Whether waiver of pre-deposit of the disputed duty and penalty should be granted, and whether recovery should be stayed pending disposal of the appeals, in a case where Cenvat credit on rent-a-cab services was disputed on the ground of use for unofficial work.

Analysis: The Tribunal noted that the credit had been denied because the cabs were used not only by employees but also by family members for unofficial purposes. It held, prima facie, that trips for unofficial work would not be eligible for Cenvat credit under the Cenvat Credit Rules, 2004. Since the entire matter required detailed examination at the appeal stage, the Tribunal considered it appropriate to impose a condition for hearing the appeals and grant interim protection for the balance demand.

Conclusion: The appellant was directed to deposit Rs. 1,00,000 within eight weeks, and on compliance, waiver of pre-deposit of the balance amount and stay of recovery were granted till disposal of the appeals.

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