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CUSTOM EXCISE & SERVICE TAX APPELLATE TRIBUNAL, MADRAS
MS. JYOTI BALASUNDARAM, J.
Sundaram Fasteners Ltd. -Appellant
Versus
Commissioner of Central Excise, Chennai -Respondent
FINAL ORDER NOS. 517-518 OF 2011 APPEAL NOS. E/618 & 632 OF 2010
Decided On : 11-04-2011
M. Kannan,C. Dhanasekaran
1. The brief facts of the case are that the assessees had availed credit of service tax paid on ‘Van Hire’ charges for the transport of the company’s employees during the period May, 2006 to February, 2007. Show Cause Notice dated 25-9-2008 was issued demanding duty of Rs. 44,621/- along with interest, on the ground that the service tax paid was not in or in relation to the manufacture of final products either directly or indirectly, and that this service was not falling under any of those enumerated Cenvat Credit Rules, 2004. The notice also proposed imposition of penalty. The notice was adjudicated vide the Order dated 15-1-2009 by confirming demand together with interest and levying equal amount of penalty. The lower appellate authority upheld the demand with interest; however, he reduced the penalty to Rs. 10,000/-. The assessees are in appeal against the confirmation of demand together with interest and penalty and the Revenue is in appeal against the reduction in the quantum of penalty.
2. I have heard both sides. I find that the lower appellate authority has relied upon the decision of the Tribunal in the case of CCE v. Manikgarh Cement - 2010 (20) S.T.R. 456 (Bom.). However, I find that in the appeal against the Tribunal’s order above cited, the Hon’ble Bombay High Court has held that the service or activity must have nexus with business of assessee to qualify as input services. Further, in the case of CCE v. Ultratech Cement Ltd. 2010 (20) S.T.R. 577 (Bom.) = 2010 (260) E.L.T. 369 (Bom.), the Hon’ble Bombay High Court has held that there must be a nexus or integral connection with the business of manufacture. It cannot be disputed that transporting of employees to the factory and back, has a direct nexus with the assessees business of manufacture of final product, as without the employees being present in the factory, manufacture cannot take place. I, therefore, hold that the assessees are entitled to credit and hence set aside the demand, interest and penalty. In the result, the appeal of the assessees is allowed and the appeal of the Revenue for enhancement of penalty is dismissed.
