Appellate Tribunal: Cenvat Credit Decisions

The Appellate Tribunal CESTAT NEW DELHI partially allowed the Revenue's appeal. Cenvat credit for transportation of employees was disallowed, as it was not provided as a welfare measure for factory transport. However, the Cenvat credit for a mediclaim policy granted to workers was upheld as a welfare measure. There was no conclusive finding that the mediclaim policy related to non-factory employees.

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Issues: (i) whether Cenvat credit was admissible on service tax paid on transportation of employees to the workplace; (ii) whether Cenvat credit was admissible on service tax paid on mediclaim policy for workers.

Issue (i): whether Cenvat credit was admissible on service tax paid on transportation of employees to the workplace.

Analysis: The record did not establish that the transport facility was provided for taking workers to the factory or that the service had a nexus with manufacture. In the absence of proof that the facility formed part of the eligible input service, credit could not be allowed.

Conclusion: Cenvat credit on employee transportation was not admissible and the issue was decided in favour of Revenue.

Issue (ii): whether Cenvat credit was admissible on service tax paid on mediclaim policy for workers.

Analysis: The mediclaim policy was treated as a welfare measure for workers, and there was no cogent finding that it related to persons outside the factory workforce. On that footing, the service was treated as eligible for credit.

Conclusion: Cenvat credit on mediclaim policy was admissible and the issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded only in part, with credit denied on employee transportation but upheld on mediclaim policy.

Ratio Decidendi: Cenvat credit is allowable only where the service has a demonstrable nexus with manufacture or qualifies as an eligible input service, while welfare-oriented services for workers may qualify if the relevant connection is established.

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