Cenvat credit on mobile and vehicle services allowed for business use, with excess usage requiring verification.

Cenvat credit on mobile phone services and maintenance of motor vehicles was examined under the Cenvat Credit Rules, 2004, with reference to the CBEC circular on mobile telephone services. Credit was considered available where the services were used in or in relation to business operations, and incidental personal use by employees did not by itself justify denial. The absence of complete vehicle records or some blank entries was not enough to show that the services were wholly outside business use. Credit was admissible within the allotted limits, while excess mobile usage and vehicle use required further verification.

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Issues: Whether Cenvat credit of service tax paid on mobile phone services and maintenance of motor vehicles was admissible as input service, and if so, to what extent where there was possible personal use by employees.

Analysis: The admissibility of credit was examined with reference to the C.B.E. & C. circular on mobile telephone service and the definition of input service under the Cenvat Credit Rules, 2004. The record showed that the services were provided in the course of business, but the department had not verified the actual extent of personal use or the precise quantum attributable to use beyond the allotted limits. The absence of complete checks or some blank particulars in the vehicle records did not by itself establish that the services were wholly outside business use. Credit could not be denied merely because incidental personal use was possible, so long as the services were used in or in relation to manufacture or business operations.

Conclusion: Cenvat credit was held admissible to the extent of the allotted limits and the matter was remanded for verification of the excess mobile usage and the use of vehicles.

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