Custom, Excise & Service Tax Tribunal
M/S. Marvel Vinyls Ltd vs C.C.E. Indore on 7 October, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. IV
Appeal No. E/52257/2016-EX(SM)
[Arising out of Order-in-Appeal No. BHO-EXCUS-001-APP-19-16-17 dated 02.05.2016, by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Bhopal].
For approval and signature:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Marvel Vinyls Ltd. .Applicants
Vs.
C.C.E. Indore .Respondent
Appearance:
Shri Vijayan Khongal, Advocate for the Applicants Shri Dharam Singh, DR for the Respondent CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Date of Hearing: 01.09.2016 Date of Pronouncement: 07.10.2016 FINAL ORDER NO. 54033/2016-EX(SM) Per Archana Wadhwa:
The appellant is engaged in the manufacture of PVC shipping and was availing Cenvat Credit facilities under Cenvat Credit Rules 2004. During the period from August 2013-February 2014 they availed the Cenvat Credit on service tax of Rs.2,21,248/- paid on input services received by them by way of renting of motor vehicle for transport of its employees from Gwalior to their factory and for their return journey.
2. Revenue by entertaining a view that such renting of motor vehicle service was excluded from the definition of input service w.e.f. 01.04.2011, raised a demand against them by way of issuance of show cause notice dated 08.09.2014. The said show cause notice culminated into an order passed by the original adjudicating authority denying the credit and confirming the demand along with interest and imposition of penalty of identical amount under Rule 15(1) of the Cenvat Credit Rules 2004. The said order was upheld by the Commissioner (A) and hence the present appeal.
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. 01.04.2011 to the following effect:
[(b) [Services provided by way of renting of a motor vehicle], in so far as they relate to a motor vehicle which is not a capital goods;]
4. 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, in so far 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.
5. 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.
6. However, I find flaw in the above interpretation of appellate authority. He has 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 good 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 good. As such the expression- which is not a capital good appearing in the said exclusion clause would require examination vis-`-vis the service provider and not vis-`-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 in as much as motor vehicles are admittedly capital goods in terms of the Rule 2 (A) of Cenvat Credit Rules.
7. 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.
[Pronounced in the open Court on 07.10.2016] (Archana Wadhwa) Member (Judicial) Bhanu 2 E/52257/2016-EX(SM)