Case Law Details

Case Name : Commissioner of Central Excise, Bangalore-I Vs Graphite India Ltd. (Karnataka High Court)
Appeal Number : CEA NO. 57 OF 2010
Date of Judgement/Order : 12/04/2011
Related Assessment Year :
Courts : All High Courts (3703) Karnataka High Court (193)

HIGH COURT OF KARNATAKA

Commissioner of Central Excise, Bangalore-I

Versus

Graphite India Ltd.

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CEA NO. 57 OF 2010

APRIL 12, 2011

JUDGMENT

Ravi Malimath, J.

The assessees are engaged in the manufacturer and clearance of excisable goods namely, graphite electrodes, nipples and graphite products. During the scrutiny of the records it appears that the assessee had availed credit of service tax on catering, pick up service and mobile telephone services. Hence, the assessee was issued with a show cause notice as to why an amount of Rs. 6,14,368/- should not be demanded/recovered from them being the irregular Cenvat credit availed on the ineligible services for the period from 2005-06 and 2006-07 along with interest and penalty. The assessee replied to the show cause notice. The assessing officer on considering the same confirmed the demand and imposed interest and penalty. Aggrieved by the same, and appeal was filed before the Commissioner who modified the said order and allowed the appeal, with consequential relief to the extent of credit availed on catering service and mobile service. However, the demand to the extent of credit availed on (Rent-a-cab-service) was confirmed. Aggrieved by the same, the assessee preferred an appeal to the Tribunal. The Tribunal while placing reliance on the judgment in the case of Stanzen Toyotetsu India (P.) Ltd. v. CCE [2009] 21 STT 321 (Bang. – CESTAT) held that the assessee is entitled for credit on the input service with relation to a Rent-a-Cab service and therefore the assessee was legitimately admissible towards the same.

2. Hence the question of law that arises for consideration in this appeal is as to whether the transportation services provided by the assessee to their staff to pick up from the residence to the factory and vice versa was input service and in or in relation to the manufacturing activity whether directly or indirectly of the final products and secondly whether the assessee is eligible for availment and utilization of the Cenvat credit towards the same.

3. The identical questions of law came up for consideration before this Court in the case of CCE v. Stanzen Toyotetsu India (P.) Ltd. [2011] 32 STT 244. This Court held that the transportation/Rent-a-Cab service is provided by the assessee to their employees in order to reach their factory premises in time which has a direct bearing on manufacturing activity. In fact, the employee is also entitled to conveyance allowance which would form part of his condition service. Therefore, by no stretch of imagination it can be construed as welfare measure by denying the availment of Cenvat credit to the assessee for providing transportation facilities as a basic necessity which has a direct bearing on the manufacturing activity. While so holding the Court was of the view that if the credit is availed by manufacturer then the question is what are the ingredients that are to be satisfied for availing such a credit. That the said service should have been utilized by the manufacturer directly or indirectly in or in relation to the manufacture of final products or used in relation to activities relating to business. If any of the test is satisfied then the service falls under input service and the manufacturer is eligible to avail Cenvat credit and the Service tax paid on such credit.

4. The question of law raised in this appeal having since been answered in the aforesaid judgment passed in CEA No. 96/2009 and connected matters disposed off on 8-4-2011 following the ratio laid down in CEA No. 96/2009 and connected matters this appeal is dismissed.

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