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M/s. Bajaj Finance Ltd. Versus Commissioner of Central Excise, Pune

2017 (11) TMI 658 - CESTAT MUMBAI

CENVAT credit - input services - Case of Revenue is that the appellant is engaged in providing output service i.e. lending of loan. The activity of seizing of vehicle by the recovery agent appointed by the appellant is not an input service for lending of loan to the customer, therefore the service does not fall under the category of input service, accordingly cenvat credit was disallowed - Held that: - the lending service is not limited to disbursing the loan but it includes the recovery of the .....

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the main part of the definition, the service of recovery agent received by the appellant is an input service. - Appeal allowed - decided in favor of appellant. - Appeal No. ST/88910/13 - Dated:- 2-11-2017 - Shri Ramesh Nair, Member ( Judicial ) And Shri Raju, Member ( Technical ) Shri A. Hidaytullah, Sr. Counsel with Shri M.P. Joshi, Advocate for Appellant Shri B. Kumar Iyer, Asstt. Commr. (A.R) for respondent ORDER Per : Ramesh Nair The appellant are holders of service tax registration and .....

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rough some agency on behalf of the appellant. As and when the customer approaches the appellant for release of the repossessed vehicle, the appellant recovered the seizing charges from the individual customer, which they have incurred as a payment made to the recovery agents. The appellant availed the cenvat credit in respect of service tax paid relating to the activity of seizing charges paid by them to their recovery agents. The show cause notice was issued proposing disallowance of cenvat cre .....

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ut service, accordingly cenvat credit was disallowed. Being aggrieved by the order-in-original, appellant filed the present appeal. 2. Shri A. Hidaytullah, Ld. Sr. Counsel along with Shri Makarand P. Joshi, Ld. Counsel appearing on behalf of the appellant submits that the appellant s output service is undisputedly Banking and Other Financial Service which include the lending of money to the borrower against the hypothecation of the vehicle. In case of failure on the part of the borrower for non- .....

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put service which is used in relation to lending of money, therefore it is directly an input service and credit is admissible. He alternately submits that since the seizing activity of the vehicle and release of repossessed vehicle is part of the security service, the vehicle which is hypothecated is a security against the loan provided by the appellant therefore the service of taking possession of the vehicle by the recovery agent is a service related to security of their lended money . The ser .....

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d from borrowers. He submits that on this issue separate proceedings have been initiated by department for demanding service tax on such recovery of seizing charges through various show cause notice covering the period from April 2007 to September 2015. All these show cause notices were adjudicated vide order dt. 24.1.2017 wherein demand of service tax was confirmed along with interest and penalties have been imposed on the appellants. The appellants appeal against the order dt. 24.1.2017 bearin .....

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ax paid by the service provider i.e. recovery agents in respect of service of seizure of the motor vehicle. This service is not used for lending of money to the borrower therefore the same is not input service, hence the credit is not admissible. He further submits that the so called input service or repossession of vehicles burden to the post disbursement of loan and it is nothing to do with the output service which is lending. He further submits that there is no service tax either on lending o .....

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he loan is given for purchase of the vehicle which is to be repaid back by the customer to the appellant as per the schedule decided under mutual agreement. The appellant have availed cenvat credit on the repossession charges charged by the recovery agent to the appellants, repossession of vehicle was carried out by the recovery agent in connection with the recovery of the overdue loan amount. In our view the lending service is not limited to disbursing the loan but it includes the recovery of t .....

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ectly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing .....

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rvice of lending. Therefore as per the main part of the definition, the service of recovery agent received by the appellant is an input service. The appellant also claimed that his service is related to Security which is specified in the inclusion part of the definition as one of the input service. We find that the vehicle on which the appellant have given the loan is hypothecated with the appellant as the security. Therefore in connection to the recovery of the loan this vehicle is taken under .....

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