2009 (6) TMI 409 - AT - Service Tax

Tribunal overturns denial of Cenvat credit on commuting services, citing precedents

TG. KIRLOSKAR AUTOMOTIVE PVT. LTD. Versus COMMR. OF C. EX., BANGALORE-II

The Tribunal allowed the appeal, overturning the denial of Cenvat credit on transportation services provided to staff for commuting. The Commissioner ... Availment of Cenvat credit on the Service Tax paid on the transportation services provided by the appellant to their staff to pickup and drop them from the residence to factory and vice-versa - lower authorities have denied the credit on the ground that credit is not eligible on input service, as the said service is only a facility extended to the employees of the company – Order-in-appeal relied on in impugned order to deny credit, set aside by the Divisional Bench of Tribunal in the case of M/s. Stanzen Toyotetsu India Pvt. Ltd. v. CCE - Accordingly, I find that the issue is now squarely covered in favour of the appellant. – Impugned order is set aside Issues:Availment of Cenvat credit on Service Tax paid for transportation services provided to staff.Analysis:The appeal was directed against Order-in-Appeal No. 164/2008 dated 28-4-2008. The issue revolved around the availment of Cenvat credit on the Service Tax paid for transportation services offered by the appellant to their staff for commuting between residence and factory. The appellant contended that the lower authorities denied the credit, citing it as a facility for employees and not an eligible input service. The Commissioner (A) relied on a previous decision in the case of M/s. Stanzen Toyotetsu India Pvt. Ltd., which was later set aside by the Divisional Bench. The appellant also referenced a Tribunal decision in the case of CCE v. Cable Corporation of India Ltd. The Tribunal found the denial of Cenvat credit on transportation services to be incorrect, contrary to the Commissioner (A)'s conclusion. The Commissioner (A) had based the denial on the premise that providing transportation service to staff was not an eligible input for credit as it was considered an extended facility for employees. However, the Tribunal's decision in Final Order No. 1419-1422/2008 favored the appellant, as the reliance on the earlier case was invalidated by the Tribunal.The Tribunal, upon perusal of the records, disagreed with the denial of Cenvat credit on transportation services provided to the staff. The Commissioner (A) had concluded that such services were not eligible for credit as they were considered extended facilities for employees. However, the Tribunal found this reasoning flawed, especially since the earlier decision relied upon by the Commissioner (A) was set aside by the Divisional Bench. The Tribunal noted that the denial of credit was based on an incorrect premise and allowed the appeal in favor of the appellant, setting aside the impugned order. The Tribunal's decision was influenced by the fact that the issue was now in favor of the appellant due to the invalidation of the earlier decision that formed the basis of the denial of credit. Consequently, the appeal was allowed with consequential relief, overturning the decision of the lower authorities.In conclusion, the Tribunal's judgment highlighted the importance of correctly interpreting the eligibility of input service credit, particularly in cases involving transportation services provided to staff. The decision emphasized the need for a thorough analysis of relevant precedents and the impact of Tribunal rulings on the final outcome of such appeals. The appellant's argument regarding the eligibility of Cenvat credit on transportation services was upheld, underscoring the significance of legal precedents and their implications on similar cases.