Cenvat credit on rent-a-cab service allowed where rented vehicles qualified as capital goods and exclusion did not apply.

Cenvat credit on rent-a-cab service is admissible where the rented motor vehicles qualify as capital goods, because the exclusion from input service applies only when the rented vehicle is not capital goods. On the stated facts, the Tribunal treated the rented vehicles as capital goods and followed its earlier view that such service does not fall within the exclusion. The denial of credit on the ground that the service was rent-a-cab therefore could not be sustained, and credit was allowed.

---

---

Issues: Whether Cenvat credit was admissible on rent-a-cab service where the rented motor vehicles were capital goods and therefore outside the exclusion from input service.

Analysis: The exclusion in the definition of input service under the Cenvat Credit Rules applies to rent-a-cab service only when the motor vehicle rented out is not capital goods. On the facts, the vehicles taken on rent were found to be capital goods, and the Tribunal followed its earlier view that such service does not fall within the exclusion. Once the rented vehicles satisfied the definition of capital goods, the denial of credit on the ground of rent-a-cab service could not stand.

Conclusion: Cenvat credit on rent-a-cab service was admissible and the assessee succeeded.

---