Cenvat Credit not allowable on Vehicle taken on Rent: CESTAT [Read Order]

Cenvat - Credit - Vehicle - taken - on - Rent - CESTAT - TAXSCAN

The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held thatCenvat credit is not allowable in respect of Vehicles taken on rent.

N RAgarwal Industries Ltd, the assessee argued that a motor vehicle is a capital good, as per the definition of the capital goods contained under Rule 2(a) of the Cenvat Credit Rules, 2004. The appellate authority has specifically observed that the said input service, i.e., renting of “motor vehicles” have been specifically included except in the case where a motor vehicle is eligible for Cenvat credit as capital goods.

Shri. S. Suriyanarayana, who appeared on behalf of the appellant stated that the exclusion is not simpliciter in respect of Rent-a Cab service but it is only subject to the condition that the Motor Vehicle which is taken on rent is not a capital good. Shri.Kalpesh P Shah, Superintendent (Authorized Representative) appeared on behalf of the revenue and reiterates the finding of the impugned order.

The question before the Tribunal is whether the appellant is eligible for Cenvat credit in respect of Rent-a-Cab service. The lower authorities have denied the Cenvat credit on the ground that the said service is excluded for allowing the Cenvat credit as per the exclusion Clause given in Rule 2(l) of Cenvat Credit Rules, 2004.

It was observed that for service providers falling under the category of renting of amotor vehicle the motor vehicle would always be capital goods. As such the expression – “which is not a capital good appearing in the said exclusion clause would require examination vis-à-vis the service provider and not vis-à-vis the recipient of the service.”

Ongoing through the said exclusion Clause, a Coram comprising of Mr Ramesh Nair, Member (Judicial) observed that since the Motor Vehicle was held to be a capital good, the eligibility of Cenvat credit on Rent-a-Cab service shall not be hit by the exclusion clause provided under Rules 2(l) of Cenvat Credit Rules, 2004. The impugned order got set aside and the appeal was allowed.

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