2009 (1) TMI 146 - AT - Service Tax

Tribunal upholds Cenvat credit for rent-a-cab, mobile, car repair and photography as input services under Cenvat Credit Rules

CESTAT allowed Cenvat credit for rent-a-cab, cellular telephone, car repair/maintenance and photography services as input services used directly or ... Definition of 'input service' under the Cenvat Credit Rules - services used 'directly or indirectly, in or in relation to manufacture' - Cenvat credit admissibility for service tax on corporate mobile/cellular telephones - rent a cab service as an 'input service' where used to bring employees for manufacture - repair and maintenance of company owned vehicles as input services - photography services used in relation to manufacturing activity as input services - widened interpretation of the phrase 'in relation to' and non exhaustive illustrative list of activitiesDefinition of 'input service' under the Cenvat Credit Rules - services used 'directly or indirectly, in or in relation to manufacture' - Cenvat credit admissibility for service tax on corporate mobile/cellular telephones - Cenvat credit of service tax paid on cellular/mobile telephone services provided to employees for company work is admissible as 'input service'. - HELD THAT: - The Tribunal applied its earlier decisions in Indian Rayon & Industries Ltd. and Grasim Industries to hold that service tax paid on mobile telephone services is available to manufacturers. The respondent's uncontested plea that mobile phones were provided to service offices and staff for company work and that any personal use was to be borne by employees was accepted. In the absence of any contrary evidence from Revenue, the condition that the service be used 'directly or indirectly, in or in relation to manufacture' is satisfied for the cellular/mobile telephone service and credit cannot be denied. [Paras 3]Credit of service tax on cellular/mobile telephone services was held to be admissible as input service.Rent a cab service as an 'input service' where used to bring employees for manufacture - services used 'directly or indirectly, in or in relation to manufacture' - Cenvat credit of service tax on rent a cab (taxi hire) services used to bring employees/technical personnel to the plants for manufacturing activity is admissible as 'input service'. - HELD THAT: - Relying on the Tribunal's decision in CCE, Nasik v. Cable Corporation of India Ltd. , the Tribunal recognised that rent a cab services used to bring employees to the factory for manufacture fall within the definition of 'input service'. The respondents had explained the use of hired taxis for transport of technical teams, engineers and staff visiting the plants and mines; Revenue produced no evidence that such taxis were used for non manufacturing activities. Thus the requirement that the services be used in relation to manufacture was found satisfied and credit could not be denied. [Paras 3]Credit of service tax on rent a cab services availed for bringing employees related to manufacture was held admissible as input service.Repair and maintenance of company owned vehicles as input services - services used 'directly or indirectly, in or in relation to manufacture' - Cenvat credit of service tax on repair and maintenance of company owned cars/vehicles used for company work is admissible as 'input service'. - HELD THAT: - The Tribunal noted that repair and maintenance services were availed in respect of a fleet of vehicles owned by the respondent for officers' use in company work. The respondent's claim as to the use of those vehicles for company's activities was not controverted by Revenue. Given that the services were used in relation to manufacturing and business activities, they fall within the inclusive definition of 'input service' under Rule 2(1) and credit was allowable. [Paras 3]Credit of service tax on repair and maintenance of company owned vehicles used for company work was held admissible as input service.Photography services used in relation to manufacturing activity as input services - widened interpretation of the phrase 'in relation to' and non exhaustive illustrative list of activities - Cenvat credit of service tax on photography services used in relation to manufacturing activity is admissible as 'input service'. - HELD THAT: - The respondent explained that photography services were used to document plant/equipment and processes for statutory bodies and for manufacturing activities; Revenue did not controvert this. The Tribunal reiterated that the phrase 'in relation to' must be given a wide connotation and the illustrative list in the inclusive definition of 'input service' is not exhaustive (as noted in Victor Gaskets India Ltd. ). On the record, photography services were held to be used in relation to manufacture or business activities and thus covered by the definition of input service. [Paras 3]Credit of service tax on photography services used in relation to manufacturing activity was held admissible as input service.Final Conclusion: The Tribunal found no infirmity in the appellate authority's order setting aside the original orders; the Revenue's appeals were dismissed and the CCE (Appeals) order allowing Cenvat credit in respect of the specified services was upheld. Issues:Revenue's appeal against the order-in-appeal setting aside Cenvat credit demands for various services like 'Rent a cab services', 'cellular telephone services', 'repair of car/motor vehicle service', and 'photography services'.Analysis:The main point of contention in this case was whether the Respondents were eligible for service tax credit for the mentioned services under the definition of 'input services' in the Cenvat Credit Rules, 2004. The Revenue argued that these services were not directly or indirectly used in or in relation to the manufacture of cement. On the other hand, the Respondent contended that these services were indeed utilized in their manufacturing and business activities.The Departmental Representative highlighted that the Respondents failed to establish how the services were linked to the manufacturing process or clearance of final products. The lack of documentary evidence supporting the use of these services for business purposes was a key argument put forth by the Revenue.In response, the Respondent's counsel provided detailed explanations for each service. They demonstrated how services like 'Rent a cab (Taxi hire)', 'Photography', 'Maintenance and repair of cars/Motor vehicles', and 'cellular/mobile telephone service' were integral to their manufacturing and business operations. The counsel referenced relevant Tribunal judgments to support their position, emphasizing the broad interpretation of the term 'in relation to' in the context of input services.Upon careful consideration of both sides' arguments and the records, the Tribunal found that the Respondents had adequately explained the use of the services in relation to their manufacturing activities. Citing previous Tribunal judgments, the Tribunal ruled in favor of the Respondent, stating that services like mobile phone usage, rent-a-cab services, repair and maintenance of vehicles, and photography services qualified as input services under the Cenvat Credit Rules, 2004.Ultimately, the Tribunal dismissed the Revenue's appeals, affirming the impugned order that set aside the Cenvat credit demands and penalties imposed on the Respondent. The decision was based on the established link between the services in question and the manufacturing or business activities of the Respondent, as supported by relevant legal precedents.In conclusion, the judgment provided a comprehensive analysis of each service in dispute, clarifying the eligibility of the Respondent for service tax credit under the Cenvat Credit Rules, 2004. The decision underscored the importance of demonstrating the direct or indirect use of services in manufacturing processes and business operations to qualify for input service credits.