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2015 (11) TMI 1182 - AT - Service TaxDenial of CENVAT Credit - eligible input services - Nexus with output services - assessee are providing the facility of lease financing to their employees to purchase cars through lease finance company - Held that:- cost of EMI payable towards leased vehicle is recovered from the employees would show that this is only a ploy adopted to ensure that the benefit of depreciation of the vehicle can be availed by the company and benefit of service tax also can be availed by the company. Both these benefits would have been lost if the individuals were to purchase a vehicle or lease a vehicle. When the cost is recovered from the employee, it cannot be said that it forms part of the final cost of output service. One of the principles followed for allowing the benefit of cenvat credit is that it should form the cost of manufacture of input, output and final product or it should form cost of output service. When the cost of leasing is not borne by the company, it cannot be said that it forms pat of the output service. In such a scenario it would not be appropriate to allow the assessee to avail the benefit of cenvat credit without incurring any cost and availing only the benefits which may offer to be passed on to the employee or may not be, with which I am not concerned. Therefore I do not find any reason to interfere with the decision of the lower authorities that assessee is not eligible for cenvat credit and the credit availed should be paid back with interest. - Penalty u/s 78 is waived - Decided partly in favour of assessee.
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