Transportation Service Provided To Employees To Reach Factory Premises From Home Is Input Service

The identical questions of law came up for consideration before this Court in the case of CCE v. Stanzen Toyotetsu India (P.) Ltd. [2011] 32 STT 244. This Court held that the transportation/Rent-a-Cab service is provided by the assessee to their employees in order to reach their factory premises in time which has a direct bearing on manufacturing activity. In fact, the employee is also entitled to conveyance allowance which would form part of his condition service. Therefore, by no stretch of imagination it can be construed as welfare measure by denying the availment of Cenvat credit to the assessee for providing transportation facilities as a basic necessity which has a direct bearing on the manufacturing activity. While so holding the Court was of the view that if the credit is availed by manufacturer then the question is what are the ingredients that are to be satisfied for availing such a credit. That the said service should have been utilized by the manufacturer directly or indirectly in or in relation to the manufacture of final products or used in relation to activities relating to business. If any of the test is satisfied then the service falls under input service and the manufacturer is eligible to avail Cenvat credit and the Service tax paid on such credit.

HIGH COURT OF KARNATAKA
Commissioner of Central Excise, Bangalore-I
v
Graphite India Ltd.
CEA NO. 57 OF 2010
APRIL 12, 2011