Excise Appeal No. 10247 of 2021-SM
(Arising out of OIA-CCESA-SRT-APPEAL-PS-123-2020-21 Dated- 25/11/2020 passed by
Commissioner of Central Excise, Customs and Service Tax-SURAT-I)
N R AGARWAL INDUSTRIES LTD
VERSUS
C.C.E. & S.T.-SURAT-I
APPEARANCE:
Shri. S. Suriyanarayanan, Advocate for the Appellant
Shri. Kalpesh P Shah, Superintendent (AR), for the Respondent
CORAM:
HON’BLE MR. RAMESH NAIR, MEMBER (JUDICIAL)
Final Order No. A/ 10055 / 2023
DATE OF HEARING: 03.01.2023
DATE OF DECISION:16.01.2023
RAMESH NAIR
The issue involved in the present case is that whether the appellant is
entitled for Cenvat credit in respect of Rent-a-Cab service or otherwise. Both
the lower authorities have denied the Cenvat credit on the said service on
the ground that the Rent-a-Cab service is excluded from the purview of
definition of input service.
Shri. S. Suriyanarayana, learned Counsel appearing on behalf of the
appellant submits that the exclusion is not simpliciter in respect of Rent-a
Cab service but it is only subject to condition that the Motor Vehicle which is
taken on rent is not a capital goods. He submits that the identical issue has
been decided in the various judgments by this Tribunal in the following
judgments:-
MARVEL VINYLS LTD-2017 (49) S.T.R. (Tri.-Del)
GUALA CLOSURES (INDIA) PVT. LTD. -2018 (10)TMI 1411 – CESTAT
AHMEDABAD
Shri. Kalpesh P Shah, learned Superintendent (Authorized
Representative) appearing on behalf of the revenue reiterates the finding of
the impugned order.
I have carefully considered the submission made by both the sides and
perused the records. I find that the limited issue involved is whether the
appellant is eligible for Cenvat credit in respect of Rent-a-Cab service. Both
the lower authorities have denied the Cenvat credit on the ground that the
said service is excluded for allowing the Cenvat credit as per exclusion
Clause given in Rule 2(l) of Cenvat credit Rules, 2004. Ongoing through the
said exclusion Clause, I find that the exclusion is provided in respect of those
Rent-a-Cab service where the vehicle taken on rent is not a capital goods.
This very issue has been considered by this Tribunal in the following
decision:
MARVEL VINYLS LTD-2017 (49) S.T.R. (Tri.-Del)
“3. After hearing both the sides, I find that the definition of
input service is contained in Rule 2(l) of the Cenvat Credit Rules,
2004 and relates to any service used by a manufacturer, whether
directly or indirectly, in or in relation to manufacture of their final
product and includes many services specified therein but excludes
some of the services specified. An Exclusion Clause B was
introduced w.e.f. 1-4-2011 to the following effect :
[Services provided by way of renting of a “[(b) motor vehicle],
insofar as they relate to a motor vehicle which is not a capital
goods;]”
A reading of the above Exclusion Clause show that services
provided by way of renting of a motor vehicle do not stand excluded
in totality. The Exclusion Clause is in respect of input services of
renting of a motor vehicle, insofar as they relate to a motor vehicle
which is not capital goods.
The contention of the assessee is that motor vehicle is a capital
goods, as per the definition of the capital goods contained under
Rule 2(a) of the Cenvat Credit Rules, 2004. The appellate authority
has specifically observed that the said input service, i.e., renting of
“motor vehicles” have been specifically included except in case
where motor vehicle is eligible for Cenvat credit as capital goods.
He has however denied the benefit to the assessee on the
ground that such motor vehicle are not capital goods for the
appellant, Cenvat credit availed on the input services of renting of
motor vehicle would not be admissible.
However, I find flaw in the above interpretation of appellate
authority. He has rightly observed that the exclusion is only in
respect of that motor vehicle which is not a capital goods. However,
he has not extended the benefit to the assessee by observing that
the same is not a capital goods for the appellant. A person who is
receiving the input services of renting of immovable property, can
never avail Cenvat credit of duty paid on the motor vehicles and as
such motor vehicle can never be a capital good to the recipient of
the said services. The motor vehicle will always be a capital goods
or otherwise for the person who is providing the services. For
service provider falling under the category of renting of motor
vehicle the motor vehicle would always be a capital goods. As such
the expression – “which is not a capital goods appearing in the said
exclusion clause would require examination vis-à-vis the service
provider and not vis-à-vis the services recipient.” As such the
interpretation of the lower authorities that motor vehicle are not
capital goods for the services recipient cannot be appreciated
inasmuch as motor vehicles are admittedly capital goods in terms of
the Rule 2(A) of Cenvat Credit Rules.
In view of the above analysis, I hold that the appellant
would be entitled to the Cenvat credit on service tax paid on the
said services. Accordingly, the impugned order is set aside and
appeal allowed with consequential relief to the appellant”.
GUALA CLOSURES (INDIA) PVT. LTD. -2018 (10)TMI 1411 – CESTAT
AHMEDABAD
“4. I have carefully considered the submission made by both the sides
and perused the records. The services of Rent a cab and Hotel
Accommodation are services are used for overall business activities of
the appellant. The only business carried out by the appellant is
manufacturing of excisable goods and sale thereof. Therefore, these
services are actually 4 E/10692/2018-SM related to the manufacturing
activities of the appellant. This tribunal in the following judgments held
that the CENVAT credit on Hotel Accommodation and Rent a Cab service
is admissible:
“Rent a Cab Service:
- Aia Engineering Ltd. Vs. C.C.E. & Ahmedabad-III, Fuinal
Order No. A/11320/2018 dated 12.06.2018, CESTAT (A/bad)
- M/s. Welspun Corp Limited vs. Commissioner of Central
Excise and Customs, Service Tax, Vadodara, Final Order No.
A/11000- 11001/2018 dated 08.05.2018, CESTAT, (A,bad)
- M/s DCM Shriram Lt.d Vs. CCE & ST- Vadodara-II, Final
Order No. A/10834/2018 dated 25.043.2018, CESTAT (A/bad)
- Commissioner of Service Tax, Chennai Vs. M/s Chennai
Container Terminal Pvt. Ltd. 2018-TIOL-2411-CESTAT-MAD
- Technocraft Industries India Pvt. Ltd. Vs. Commissioenr of
Central Excise Thane-1 2018-TIOL-1738-CESTAT-MUM
- Commissioner Vs. Transpek Industry Ltd. 2018(12) GSTL 29
(Guj.)
- Commissioner of Service Tax, Pune Vs. M/s Nihilent
Technologies Pvt. Ltd. 2017-TIOL-2696-CESTAT-Mum
- M/s Marvel Vinlys Ltd. Vs Commissioner of Central Excise,
Indore 2016-TIOL-3071-CESTAT-DEL House Accommodation
Service:
- M/s Sarita handa Exports Pvt. Ltd. Vs. Commissioner Central
Excise, Gurgaon-II 2016-TIOL-2559-CESTAT-CHD
- Following the above judgments the appellant is entitled for the
CENVAT credit. Accordingly I hold that the demand in respect of CENVAT
credit on Rent a Cab service and Hotel Accommodation is set aside. As
regard courier service as per Hon’ble Supreme Court judgment in the
case of Ultratech Cement Ltd. (supra) credit is admissible only in respect
of services used for the removal of goods upto the place of removal.
From the perusal of the records, it is not clear that whether all the
courier services is used for removal of goods. As per the submission of
Ld. Counsel, the courier service is used for sending documents or inward
transportations as well as for outward transportation. As regard the
inward transportation and sending and receiving the documents, the
CENVAT credit is admissible. However, as regard the courier service used
for outward transportation of the goods, if it is beyond place of removal
then it is not admissible. As 5 E/10692/2018-SM regard the limitation
issue raised by Ld. Counsel, I agree that on the issue of service used for
removal of goods there was a serious doubt. There were various
conflicting judgments on the said issue, the matter was referred to the
larger bench in the case of ABV Ltd. 2009 (15) STR 23-Larger Bench and,
thus, subsequently Hon’ble Supreme Court in the case of Ultratech
Cement Ltd. (supra) decided the issue. It is also a fact that the appellant
was availing the credit relying on the Board’s Circular dated 23.08.2017
which was not withdrawn by the Revenue. In these circumstances,
malafied intention cannot be attributed to the appellant. Therefore, the
demand for extended period is hit by limitation. The same is set aside
being time barred. For the normal period in respect of courier services
the demand will sustain only in respect of courier services which is used
for removal of excisable goods beyond the place of removal. Therefore,
the demand in respect of courier services for the normal period of one
year needs to be requantified by the Adjudicating authority. As a result,
the demand in respect of CENVAT credit on Rent a Cab service, Hotel
Accommodation and demand of extended period in respect of courier
service is set aside and for remaining portion, the matter is remanded for
requantification to the Adjudicating Authority. Taking into consideration
overall facts and circumstances and since no malafied intention is
involved, the penalty imposed by the lower authority is set aside in
entirety. Accordingly, the appeal is disposed off in the above terms”.
4.1 From the above decision, it can be seen that since the Motor Vehicle
was held to be a capital goods, the eligibility of Cenvat credit on Rent-a-Cab
service shall not be hit by the exclusion clause provided under Rules 2(l) of
Cenvat Credit Rules, 2004. In the present case also the vehicle taken on
rent is defined as capital goods in terms of Rule 2(a) of the Cenvat Credit
Rules, 2004, therefore, the exclusion clause is not applicable in the present
case.
Accordingly, the impugned order is set aside. Appeal is allowed.
(Pronounced in the open court on 16.01.2023)
(RAMESH NAIR)
MEMBER (JUDICIAL)
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