2008 (7) TMI 65 - AT - Service Tax

Appeal Granted: Cenvat Credit Allowed for Airport Services on Business Aircraft

FORCE MOTORS LIMITED Versus CCE, PUNE

The Member (Judicial) allowed the appeal, setting aside the denial of Cenvat Credit on service tax paid by the Airport Authority of India for services ... Appellant availed credit of tax paid by Airports Authority of India (AAI) in respect of the Air Craft which is owned and operated by the appellant for carrying on business as a manufacturer - Since it is an admitted position that the aircraft is used for business activities, the services rendered by the airport authority and service tax charged by them would get covered under the definition of input services - credit to the appellant on the service tax paid by AAI is allowable Issues:Availment of credit of tax paid by Airports Authority of India for business purposes, interpretation of Rule 2(1) of Cenvat Credit Rules regarding input services, applicability of input service definition to services provided by Airport Authority of India.Analysis:The case involved a dispute over the appellant's availing of credit for tax paid by Airports Authority of India for an aircraft used for business purposes. The Revenue issued a show cause notice to disallow the credit and impose a penalty, which was confirmed by the adjudicating authority and later upheld by the Ld. Commissioner (Appeals) with a reduced penalty. The main contention was whether the services provided by the Airport Authority could be considered an input service as per Rule 2(1) of the Cenvat Credit Rules.The appellant argued that the aircraft parked at the airport was owned by the company and used for business purposes, citing previous Tribunal decisions to support their case. On the other hand, the Ld. SDR contended that the services provided by the Airport Authority did not fall under the definition of input service as per Rule 2(1) of the Cenvat Credit Rules. The Ld. Commissioner (Appeals) upheld the denial of Cenvat Credit based on the view that the services provided by the Airport Authority were too remote to be considered an input service.Upon considering the submissions and perusing the records, the Member (Judicial) found that the appellant used the aircraft for business activities, making the services rendered by the airport authority eligible for Cenvat Credit under Rule 2(1) of the Cenvat Credit Rules. The Member referenced a previous Tribunal decision to support this view, emphasizing that in the modern business environment, the use of such aircraft is essential for business activities, justifying the allowance of service tax credit on services provided by the Airport Authority.Ultimately, the Member set aside the impugned order denying Cenvat Credit on the service tax paid by the Airport Authority of India, allowing the appeal with consequential relief if any. The judgment highlighted the importance of considering the practical necessity of services in the context of modern business operations when determining eligibility for Cenvat Credit.This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the reasoning behind the decision, focusing on the interpretation of relevant legal provisions and precedents cited during the case.