Tribunal grants Cenvat credit on air travel & maintenance services, burden of proof on department

The Tribunal allowed the appellant's appeal, overturning the denial of Cenvat credit on air travel services, repair and maintenance services, and annual maintenance charges. The burden of proof was on the department to establish personal use of air travel services, which they failed to do. The classification of services as works contract services at the invoice stage did not affect credit eligibility, as the services were not related to construction. Therefore, the appellant was deemed eligible for credit, and the impugned order was set aside with consequential relief.

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Issues:
1. Denial of Cenvat credit on air travel services, repair and maintenance services, and annual maintenance charges.

Analysis:
The appellant, a manufacturer of Cement and Clinker, distributed credit of service tax availed in their head office among their factories through an ISD invoice. A Show Cause Notice was issued seeking to deny credit on input services transferred through ISD invoice related to air travel services, repair and maintenance services, and AMC. The original authority disallowed the credit, ordered recovery under Rule 14 of CCR, 2004, confirmed interest recovery, and imposed a penalty. The first appellate authority upheld the original order, leading to the current appeal.

The appellant argued that air travel services were for official purposes and not for personal use, hence should not be excluded from input services. They relied on the definition of input service under Rule 2(l) of CCR, 2004. The department failed to prove that the travel was solely for personal benefit. The appellate authority's decision to deny credit was based on the appellant's failure to prove it was not for personal work. The Tribunal disagreed, stating that the burden of proof lies with the department, and since no evidence was provided to establish personal use, credit for air travel services was allowed.

Regarding repair and maintenance services and AMC, they were considered works contract services due to involving both material supply and services. However, the invoices did not classify them as works contract services. The Tribunal ruled that the classification at the invoice stage cannot be altered for credit eligibility. Not all works contract services are excluded from input services; only those related to construction or laying foundations are excluded. The services in question were for maintenance of office equipment and carpets, not construction-related, making the appellant eligible for credit. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

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