Rakesh Kumar (Oral):
The Appellant are manufacturer of zinc and its products chargeable to central excise duty. During the period of dispute, they availed cenvat credit of Rs.64,47,317/- in respect of rent-a-cab services availed for transportation of workers/employees from their factory to homes and back, credit of Rs.48,617/- in respect of rent-a-cab services for sending sick employees to hospital and besides this, cenvat credit of Rs.62,435/- in respect of rent-a-cab service for transporting children of employees/workers to school/tuition centres and back.
2. The Department being of the view that appellant are not eligible for cenvat credit in respect of rent-a-cab services availed for the above three purposes, issued a show cause notice dated 4.9.2009 for recovery of allegedly wrongly taken credit amounting to Rs.65,58,369/- during the period from July 2004 to January, 2009 along with interest and also for imposition of penalty on the appellant. This show cause notice was adjudicated by the Commissioner vide order -in - original dated 6.8.2010 by which the Commissioner held that rent-a-cab service availed by the appellant for the purposes mentioned above, is not covered by the definition of âInput Service and accordingly, he confirmed the cenvat credit demand along with interest and besides this, he also imposed penalty of Rs.10,000/- on the appellant under Rule 15 of Cenvat Credit Rules, 2004. Against this order of the Commissioner, this appeal has been filed.
3. Heard both sides.
4. Shri Hemant Bajaj, Advocate, the ld. Counsel for the appellant pleaded that so far as eligibility of cenvat credit in respect of rent-a-cab services availed for bringing workers /employees to factory and dropping them back home is concerned, the issue involved stands decided in favour of the appellant by the judgments of the Honble Karnataka High Court in the cases of C.C.E., Bangalore III vs. Stanzen Toyotetsu India (P) Ltd. reported in 2011 (23) STR 444 (Kar.) , C.C.E., Bangalore vs. T.G. Kirloskar Automotive Pvt. Ltd. reported in (2011) 32 STT - 251, the judgment of Honble Punjab and Haryana High Court in the case of C.C.E., Chandigarh I vs. M/s Federal Mogul Goetze (India) Ltd. reported in 2011 - TIOL - 650 - HC - P and H - ST; that so far as services of rent-a-cab services availed for transportation of sick employees to the hospital is concerned, in terms of provisions of Section 45(4) of the Factories Act, 1948, every factory having employees more than 250 is required to maintain ambulance room and hence hiring of ambulance is covered by the definition of âInput Service; that as regards hiring of vehicle for transportation of workers children from their homes to the schools/tuitions centre and dropping them back, these services are also covered by the definition of âInput Service as the appellants factory and workers residential colony are located in far-off area where no conveyance is available. He, therefore, pleaded that impugned order is not sustainable.
5. Shri Sanjay Jain, ld. A.R. for Revenue, defended the impugned order by reiterating the findings of the Commissioner in it and emphasised that rent-a-cab service availed by the appellant for bringing employees from their residence to the factory and dropping them back, transportation of the sick employees to the hospital and transportation of the workers children to the schools/tuition centres and dropping them back , have no nexus with the manufacture of final product and hence the aforesaid services are not covered by the definition of âInput Service.
6. We have considered the submissions from both the sides and perused the record.
7. So far as service of rent-a-cab service availed for bringing employees to the factory and dropping them back home is concerned, we find that this issue stands decided in favour of the appellant by judgment of Honble Karnataka High Court in the case of C.C.E., Bangalore vs. Stanzen Toyotetsu India (P) Ltd. (supra) and C.C.E., Bangalore III vs. T.G. Kirloska Automoiive Pvt. Ltd. reported in (supra); that also judgment of Honble Punjab and Haryana High Court in the case of C.C.E., Chandigarh I vs. M/s Federal Mogul Goetze (India) Ltd. (supra). In view of this, we hold that rent-a-cab service availed for bringing the employees to the factory and dropping them back home is covered by the definition of âInput Service.
8. Coming to the cenvat credit in relation to the ambulance services, in this regard, perusal of Section 45(4) of the Factories Act, 1948 would show that the Factories Act casts an obligation that every factory to maintain first-aid service facility and if the strength of employees of factory is more than 500 , the factory is required to maintain ambulance room (medical room) of prescribed size containing prescribed equipment and medical facilities besides nursing treatment etc. It is obvious that every factory owner is under legal obligation to ensure basic medical facility for the welfare of the employees who may suffer from injury in accident or may suddenly fall sick. In the instant case, hiring of ambulance for carrying sick employees to the hospital for treatment is extension of the aforesaid legal obligation of the assessee. Otherwise also, health of the workers in a factory has direct relation to its output and therefore, in our considered view, the service tax paid on ambulance service i.e rent-a-cab service for ambulance, by the appellant in respect of welfare of employees has nexus with the production of final product. Accordingly, we are of the view that the Commissioner has fallen in error in disallowing aforesaid cenvat credit to the appellant.
9. As regards the service of rent-a-cab availed for transportation of employees children to schools/tuition centres, this, in our considered view, is a welfare activity which is not covered by the definition of âInput Service in view of judgment of Bombay High Court in the case of C.C.E. , Nagpur vs. Manikgarh Cement reported in 2010 (20) STR 456 (Bom.). Hence the cenvat credit demand of Rs.62,435/- is upheld along with interest.
10. Â In view of the above discussion, while the cenvat credit demand of Rs.62,435/- in respect of rent-a-cab service availed for carrying employees children to schools and dropping them back homes is upheld along with interest, , the rest of cenvat credit demand is set aside. Since the issue involved in this appeal relates to interpretation of the provisions of Cenvat Credit Rules, penalty of Rs.10,000/- imposed on the appellant is also waived.
11. Appeal is disposed of as above.