HINDUSTAN ZINC LTD. Vs. CCE, JAIPUR I

JUDGEMENT

(1.) 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. 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 'Input 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.

(2.) HEARD both sides.

(3.) 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 worker's 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 Input Service.