2019 (2) TMI 76 - AT - Central Excise

Interpretation of 'input services' and disallowance of CENVAT Credit on specific services in recent judgment

M/s. Hindustan Motor Finance Corporation Ltd. (Formerly ‘M/s. Hindustan Motors Ltd. ’) Versus The Commissioner of G.S.T. & Central Excise, Chennai Outer Commissionerate

The judgment addressed the disallowance of CENVAT Credit on specific services, the interpretation of the definition of 'input services,' and the ... CENVAT Credit - input services - GTA Service - Travel Service. Travel Agency Services - Held that:- Appellant has only been used by the appellant in relation to the manufacture and clearance of final products. Also, the dispute pertains to the period prior to 01.04.2011 when the definition of “input services” had a wide ambit and included any service used by a manufacturer, directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal. Further, it is for the Revenue to prove that the same were used for the personal use/consumption of the employees for which nothing has been brought on record in the case on hand - credit allowed. GTA (Outward) Services - Held that:- The Ld. Advocate has not pressed the issue - Demand upheld. Appeal allowed in part. Issues involved:1. Disallowance of CENVAT Credit on Travel Services and GTA (Outward) Services.2. Interpretation of the definition of 'input services' under Rule 2(l) of the CENVAT Credit Rules, 2004.3. Applicability of judicial precedents in determining the eligibility of CENVAT Credit for specific services.Detailed Analysis:Issue 1: Disallowance of CENVAT Credit on Travel Services and GTA (Outward) ServicesThe appellant, engaged in manufacturing motor cars, availed CENVAT Credit on various input services. Show Cause Notices were issued proposing to recover the credit availed, which was confirmed by the lower adjudicating authority. The first appellate authority upheld the demand and interest only on specific services, setting aside the demand on others. The appellant appealed the disallowance of credit on Travel Agency Services and GTA (Outward) Services. The appellant argued that Travel Agency Services were used for business-related activities, and the Revenue failed to prove personal use by employees. The judge noted that the definition of 'input services' prior to 01.04.2011 was broad and included services used directly or indirectly in the manufacture and clearance of final products. Referring to a precedent, the judge found that the denial of credit on Travel Agency Services was unjustified, setting aside the demand. However, as the issue regarding GTA (Outward) Services was not pressed by the appellant, the demand on that service was upheld.Issue 2: Interpretation of the definition of 'input services' under Rule 2(l) of the CENVAT Credit Rules, 2004The judge analyzed the definition of 'input services' under Rule 2(l), emphasizing services used directly or indirectly in or in relation to the manufacture of final products and clearance from the place of removal. Referring to a judicial precedent, the judge reiterated that services used in manufacturing activities and borne by the assessee form part of the value of goods manufactured, making them eligible for CENVAT Credit. The judge concluded that the services in question qualified as 'input services' under the broad definition, and the service tax paid on them was available as CENVAT Credit to the assessee.Issue 3: Applicability of judicial precedents in determining the eligibility of CENVAT Credit for specific servicesThe judge considered a judicial precedent where the denial of input service credit was discussed, and the appellate authority upheld the decision. The judge highlighted that the service tax paid on eligible services would be available as CENVAT Credit to the assessee. By relying on this precedent and finding no disputes from the Revenue, the judge concluded that the denial of credit on Travel Agency Services was unjustified, aligning with the previous ruling. The judge emphasized that the Revenue failed to produce any contradictory orders or judgments, supporting the decision to set aside the demand on Travel Agency Services based on the established legal principles.In conclusion, the judgment addressed the disallowance of CENVAT Credit on specific services, the interpretation of the definition of 'input services,' and the application of judicial precedents to determine the eligibility of CENVAT Credit for the appellant. The ruling set aside the demand on Travel Agency Services while upholding the demand on GTA (Outward) Services, based on the arguments presented and legal principles applied.