2024 (9) TMI 178 - AT - Central Excise

Cenvat credit allowed on outbound transit insurance and employee transport services, denied on hospitality services

Skoda Auto India Pvt. Ltd. Versus Commissioner of CGST & CE, Pune And Skoda Auto India Pvt. Ltd. Versus Commissioner of CE & ST, Aurangabad

CESTAT Mumbai allowed appeal partially regarding cenvat credit claims. Appellant entitled to cenvat credit on outbound transit insurance premium up to ... Cenvat credit of service tax paid on outbound transit insurance - Cenvat credit of service tax paid on transportation for pickup and drop facility for employees - Cenvat credit of service tax paid on hospitality and management services. Cenvat credit of service tax paid on outbound transit insurance - HELD THAT:- On going through the ruling by Hon’ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. [2018 (3) TMI 993 - SUPREME COURT], it is found that cenvat credit of service tax paid on insurance premium associated with outward transportation of final product from factory gate to depot for the period upto 01.03.2008 is admissible. Thus, out of the cenvat credit of Rs.31,60,453/-, appellant is entitled to avail cenvat credit which was service tax paid on such insurance premium upto 01.03.2008. Cenvat credit of service tax paid on transportation for pickup and drop facility for employees - HELD THAT:- It is observed that Hon’ble Karnataka High Court has in both the cases, relied upon by learned counsel for the appellant, such as COMMISSIONER OF CENTRAL EXCISE, BANGALORE-III, COMMISSIONERATE VERSUS STANZEN TOYOTETSU INDIA (P.) LTD. [2011 (4) TMI 201 - KARNATAKA HIGH COURT] and COMMISSIONER OF CENTRAL EXCISE, BANGALORE-I VERSUS BELL CERAMICS LTD. [2011 (9) TMI 792 - KARNATAKA HIGH COURT], ruled that such services are input services and by following the ruling by Hon’ble Karnataka High Court, appellant was entitled for availment of cenvat credit of Rs.10,63,186/- during the period of dispute on service tax paid on bus transportation utilized for pickup and drop of employees. Cenvat credit of service tax paid on hospitality and management services - HELD THAT:- The contention of Revenue is accepted that since the appellant is in the jurisdiction of Hon’ble Bombay High Court, the ruling by Hon’ble Bombay High Court in the case of CCE VERSUS MANIKGARH CEMENT [2010 (10) TMI 10 - BOMBAY HIGH COURT] will prevail and it is found that as per the said ruling, appellant is not entitled to avail cenvat credit of Rs.20,73,220/-. Appeal allowed in part. Issues:- Admissibility of cenvat credit on service tax paid on insurance premium for outbound transportation of final products- Admissibility of cenvat credit on service tax paid on transportation for pickup and drop facility for employees- Admissibility of cenvat credit on service tax paid on hospitality and management services received at residential colony of employeesAnalysis:Admissibility of cenvat credit on service tax paid on insurance premium for outbound transportation of final products:The appellant, a manufacturer of excisable goods, availed cenvat credit on service tax paid on insurance premium for outbound movement of final products. The issue revolved around the admissibility of this credit. The appellant argued that until March 1, 2008, cenvat credit was available for outward transportation of goods, including associated insurance. The appellant cited the ruling of the Hon'ble Supreme Court in a specific case to support their claim. The Tribunal examined the legal precedents and ruled that cenvat credit on insurance premium for outbound transportation was admissible until March 1, 2008. Consequently, the appellant was allowed to avail cenvat credit for the relevant period.Admissibility of cenvat credit on service tax paid on transportation for pickup and drop facility for employees:Another issue was the admissibility of cenvat credit on service tax paid for bus transportation provided to employees for pickup and drop. The appellant contended that providing transportation to workers was a business-related activity, citing relevant High Court decisions. The Tribunal agreed with the appellant, following the rulings by the High Court, and allowed the appellant to avail cenvat credit for the service tax paid on bus transportation for employees during the disputed period.Admissibility of cenvat credit on service tax paid on hospitality and management services received at residential colony of employees:The third issue concerned the admissibility of cenvat credit on service tax paid for hospitality and management services at the residential colony of employees. The appellant relied on a High Court ruling to support their claim. However, the Tribunal considered the jurisdiction of the Bombay High Court and ruled against the appellant, stating that the appellant was not entitled to avail cenvat credit for these services. Therefore, the appellant was not allowed to claim cenvat credit for the service tax paid on hospitality and management services.In conclusion, the Tribunal partially allowed the appeals, permitting cenvat credit for certain services while denying it for others. The penalties imposed were set aside due to the interpretational nature of the issues. The appellant was directed to pay interest on the inadmissible cenvat credit and instructed to approach the Assistant Commissioner for quantification of the admissible cenvat credit.