CENVAT credit on rent a cab and convention services allowed where vehicle was capital goods and maintenance workshop supported manufacture.

Rent a cab service remained eligible for CENVAT credit because the post-01.04.2011 exclusion for renting of motor vehicles applied only where the vehicle was not capital goods; as the rented vehicle fell within the capital goods definition, denial of credit was unjustified. Convention service used for a workshop on maintenance of a bulk handling system was also treated as having a direct nexus with manufacture and removal of goods, so credit was admissible despite the service being described as optional. The demand was set aside on these two services, while the issue relating to construction service was left undisturbed subject to verification before the adjudicating authority.

---

---

Issues: (i) Whether rent a cab service was hit by the exclusion to input service and therefore inadmissible for CENVAT credit. (ii) Whether convention service availed for a workshop on maintenance of bulk handling system was used in relation to manufacture and removal of goods so as to qualify for CENVAT credit.

Issue (i): Whether rent a cab service was hit by the exclusion to input service and therefore inadmissible for CENVAT credit.

Analysis: The exclusion inserted from 01.04.2011 applied to renting of a motor vehicle only where the vehicle rented out was not capital goods. The vehicle taken on rent in the present case fell within the category of capital goods under the relevant definition, and therefore the exclusion was not attracted.

Conclusion: Rent a cab service was admissible and CENVAT credit could not be denied on that ground.

Issue (ii): Whether convention service availed for a workshop on maintenance of bulk handling system was used in relation to manufacture and removal of goods so as to qualify for CENVAT credit.

Analysis: The service was availed for upgrading the maintenance system of the bulk handling facility, which had a direct nexus with the manufacturing activity and removal of goods. The denial based on the characterisation of the service as optional was not accepted.

Conclusion: Convention service was admissible and the denial of CENVAT credit was unsustainable.

Final Conclusion: The demand was set aside for rent a cab service and convention service, while the finding relating to construction service was left undisturbed with verification to follow before the adjudicating authority.

Ratio Decidendi: Where a post-01.04.2011 exclusion applies only to renting of a motor vehicle that is not capital goods, credit remains available if the rented vehicle falls within the statutory definition of capital goods, and services used for maintaining or upgrading manufacturing infrastructure retain nexus with manufacture.

---