2011 (1) TMI 45 - AT - Service Tax

Cenvat Credit - service tax paid on passenger air fare servicing charges and insurance charges of company vehicle residential telephone lines of the staff of the assesse - Held that - assessee is eligible to credit of service tax paid on air travel fare if the air travel has been performed for the purpose of company business - servicing charges and insurance charges of the company vehicle are to be held as being in relation to the manufacture of final products - it is not the case of the Revenue that telephone service was used for personal purposes of the officials of the assessee - Cenvat credit allowed - revenue appeal dismissed.

Summary

Issues:
1) Extension of credit of service tax on passenger air fare
2) Extension of credit of service tax on servicing charges and insurance charges of company vehicle
3) Extension of credit of service tax on residential telephone lines of the staff
4) Setting aside of penalty imposed under Rule 15 of the CENVAT Credit Rules

Extension of Credit on Passenger Air Fare:
The judgment addressed the issue of extending credit of service tax paid on passenger air fare for company business purposes. The Commissioner (Appeals) found the assessee eligible for the credit as the air travel was not for personal purposes but for company business. The Tribunal upheld this decision, citing the absence of evidence supporting personal use by officers. Therefore, the extension of credit on passenger air fare was deemed appropriate.

Extension of Credit on Servicing and Insurance Charges of Company Vehicle:
Regarding the extension of credit on servicing and insurance charges of the company vehicle, the Tribunal referred to a previous decision in CCE Guntur Vs CCL Products (India) Ltd. The Tribunal held that these charges were related to the manufacture of final products. Following the precedent, the Tribunal upheld the extension of credit on servicing and insurance charges of the company vehicle.

Extension of Credit on Residential Telephone Lines:
The judgment also considered the extension of credit on service tax paid on residential telephone lines of the staff. Citing the decision in ITC Ltd. Vs CCE Salem, and noting that there was no evidence of personal use by officials, the Tribunal agreed that the credit was admissible. The Tribunal supported the lower appellate authority's decision on this matter.

Setting Aside of Penalty under Rule 15:
Additionally, the judgment addressed the setting aside of the penalty imposed under Rule 15 of the CENVAT Credit Rules. The Tribunal upheld the impugned order in extending credit on passenger air fare, servicing and insurance charges of the company vehicle, and residential telephone lines of the staff. The appeal by the Revenue was rejected, and the cross-objection was dismissed as it was considered only in the nature of comments or a reply to the Revenue's appeal.

In conclusion, the judgment favored the assessee on all issues, upholding the extension of credit on various service tax payments and setting aside the penalty imposed under Rule 15. The decision was based on legal precedents and the absence of evidence supporting the Revenue's claims.