2015 (12) TMI 1102 - AT - Central Excise

Appellate Tribunal Upholds Denial of Cenvat Credit for Fireworks Industry

M/s. S.K.D. Lakshmanan Fireworks Industries Versus CE, ST, Tirunelveli

The appeal was dismissed by the Appellate Tribunal CESTAT CHENNAI on 19.11.2015. The appellant, a fireworks industry, sought cenvat credit for various ... CENVAT Credit - Various input service - Held that:- In terms of Rule 2(1) (B) of the Cenvat Credit Rules, 2004, credit of service tax paid on General Insurance Services (Section 65(105) (d), renting of a cab (Section 65(105) (o), motor vehicle related service (repair, reconditioning or restoration of motor vehicles, in any manner)(Section 65(105)(zo) and supply of tangible goods (Section 65(105)(zzzzj), if these services relate to motor vehicles, is not allowed. Further, in terms of Rule 2(1)(B) of Cenvat Credit Rules, 2004, these credits can be taken only if these services are used for providing taxable services for which credit on motor vehicle is available as capital goods. In other words these credits are available to them only if they are a service provider providing services such as courier service. Tour operator service, rent-a-cab operator service, providing Goods Transport Agency service. Outdoor caterer service etc. Since, the assessee is not a service provider and is only a manufacturer, the credit on the above mentioned services, when they relate to motor vehicles, are not available to them. Hence, it appears that the assessee is not eligible to take credit of these services in respect of two wheelers, four wheelers used in their factory or office. - Assessee cannot take credit of service tax paid on insurance in respect of their employees - No merit in appeal - Decided against Assessee. Issues:Appellant's claim for cenvat credit of service tax paid on various services; Denial of cenvat credit by lower appellate authority; Appellant's non-appearance in hearings; Disallowance of cenvat credit on insurance services; Applicability of Rule 2(1)(B) and Rule 2(1)(C) of Cenvat Credit Rules, 2004.Analysis:1. The appellant, a fireworks industry, sought cenvat credit for service tax paid on General Insurance Service, Renting of a Cab, Motor Vehicle related service, and Supply of Tangible goods under Rule 2(1)(B) of Cenvat Credit Rules, 2004. The lower appellate authority found the credits wrongly claimed and imposed penalties under Rule 2(1)(C) and Rule 3(1) and 3(4) of CCR. The Commissioner (Appeals) upheld the decision, leading to the present appeal.2. The appellant's habit of non-appearance in hearings was noted, prompting the hearing due to the minimal amount involved. The Revenue argued that the appellant wrongly claimed credit on insurance premium, maintenance, repair of motor vehicles, and group insurance for factory workers, which was disallowed under Rule 14 of Cenvat Credit Rules, 2004. The appellant deposited the disputed amount, interest, and penalty, with the Commissioner (Appeals) affirming the rejection of the appeal.3. The definition of input service under Rule 2(1) of Cenvat Credit Rules, 2004 was crucial in determining the eligibility for credit. Rule 2(1)(B) restricts credit for services related to motor vehicles unless used for specific taxable services, excluding manufacturers like the appellant. Rule 2(1)(C) further disallows credit on life insurance, health insurance for personal employee use. The group insurance, though claimed by the appellant, ultimately benefits the workers, making the credit inadmissible.4. Consequently, the appeal was dismissed as the appellant failed to meet the criteria set by Rule 2(1)(B) and Rule 2(1)(C) of the Cenvat Credit Rules, 2004. The judgment emphasized the ineligibility of the appellant, a manufacturer, to claim credit on services related to motor vehicles and personal insurance services under the mentioned rules.5. The judgment, delivered on 19.11.2015 by the Appellate Tribunal CESTAT CHENNAI, clarified the provisions of the Cenvat Credit Rules, 2004, and their application to the appellant's case, ultimately leading to the rejection of the appeal.