Case Law Details
CESTAT, BANGALORE BENCH
Sandvik Asia Ltd.
versus
Commissioner of Central Excise, Hyderabad
FINAL ORDER NOS. 607 & 608 OF 2012
STAY ORDER NOS. 1516 & 1517 OF 2012
STAY APPLICATION NOS. 112 OF 2009 & 434 OF 2010
CENTRAL EXCISE APPEAL NO. 168 OF 2009
APPEAL NO. ST/330 OF 2009
AUGUST 31, 2012
ORDER
1.1 Appeal No. ST/330/2009 is by the party against the order of the Commissioner (Appeals) No. 10/2008 (H-I) ST dated 28.11.2008. Considering the nature of dispute involved, I waive pre-deposit and proceed to take up the appeal for final hearing.
1.2 Appeal No. E/168/2009 is by the department against the same order of the Commissioner (Appeals). This appeal was not listed today and on being pointed out by the learned Superintendent (AR), the appeal was taken up for final hearing with the consent of both sides.
2. Heard both sides.
3. Appellants were issued a show-cause notice dated 30.04.2008 proposing to deny the credit of Rs. 1,15,278/- on services of rent-a-cab and consequently proposing demand. The appellant contested the demand stating that the rent-a-cab services has been used only in relation to business activities connected with manufacture and sale of the final products. Original authority did not accept this submission and denied the credit and consequently confirmed demand as proposed in the show-cause notice and imposed a penalty of Rs. 10,000/- under Rule 15 of CENVAT Credit Rules 2004 read with Section 78 of the Finance Act 1994. The Commissioner (Appeals) upheld the order of the original authority insofar as the same related to demand of service tax. However, he has set aside the interest and penalty. The assessee is in appeal challenging the demand of denial of credit and the department is in appeal challenging setting aside the penalty.
4. Learned advocate appearing for the assessee submits that the rent-a-cab service has been utilized primarily for transporting their employees to the factory from their residences and back to their residences. It was also used for transporting visitors like dealers and raw-material suppliers who were closely connected to their business activities. He, therefore, submits that rent-a-cab service should be treated as ‘input service’ in relation to their manufacturing activity and should be allowed credit in view of decision of the Hon’ble High Court of Karnataka in the case of CCE v. Stanzen Toyotetsu India (P) Ltd. [2011] 32 STT 244. He particularly refers to paragraph 13 of the said judgment.
5. Learned Superintendent (AR) reiterates the finding and reasoning of the Commissioner (Appeals) insofar as the same related to denial of credit. He particularly submits that the claim on behalf of the assessee that the rent-a-cab service has been utilized for transport of employees and business related visitors is being raised for the first time before the Tribunal and has not been taken up before the authorities below. He further submits that the Commissioner (Appeals) erred in setting aside the interest which is mandatory when the credit has been wrongly taken and utilized. He also submits that, in the facts and circumstances of the case, the penalty should not have also been set aside.
6. I have carefully considered the submissions from both sides and perused the records. The decision of the Hon’ble High Court in respect of treating rent-a-cab service as ‘input service’ is as follows:
“Rent-a-Cab service is provided by the assessee to these workers to reach the factory premises in tie which has a direct bearing on the manufacturing activity. In fact the employees is also entitled to conveyance allowance. It also would form part of a condition of service and the amounts spent on the conveyance of the employees is also a factor which will be taken into consideration by the employees in fixing the price of the final product. By no stretch of imagination can it be construed as a welfare measure. It is a basic necessity. To ensure that the work force comes on time at the work place, the employers have taken this measure which has a direct bearing on the manufacturing activity. At any rate it is an activity relating to business.”
7. The appellants shall be eligible for the credit of rent-a-cab service provided, they are able to satisfy that the rent-a-cab service has been utilized for transport of employees/officials or business related visitors to their factory/office. These submissions have not been specifically made before the authorities below, as rightly pointed by the learned Superintendent (AR). Under these circumstances, I deem it appropriate to set aside the order of the Commissioner (Appeals) and remand the matter to the original authority for fresh consideration after granting opportunity to the assessee to produce additional evidence and granting them reasonable opportunity of hearing. All the issues are kept open.
8. The appeals are allowed by way of remand. Stay petitions are stand disposed of.
