By TIOL News Service

MUMBAI, DEC 29, 2014: THE appellant is a banking company and registered with the Service Tax department in respect of Bank and Financial Services and Credit Card service etc.

A SCN dated 5.3.2013 was issued alleging that during the period 2008-09 to 2011-12the appellant availed inadmissible CENVAT credit on goods like almirah, chairs, defender safe, display unit/vinyl display, drop box, fire resistant file cabinets, ladder, safe deposit lockers, signage/signage board, sleeper for locker, sofa, storewel, strong room door, frill, door and frill gate etc. which do not qualify as ‘capital goods'. There is also an allegation that the appellant had availed CENVAT credit on services which did not have any nexus/proximity to the output services provided and thirdly the appellant had availed CENVAT credit on the services provided by Forex Broker, which are exclusively used for Inter-bank forex trading, which is exempted under Notification no. 19/2009-ST and as such the services utilized exclusively for exempted service, are not admissible. On services alleged to be not eligible to credit for lack of nexus with output services are club or association services, transport (staff relocation) of goods by road and travel agents services.

The CCE, Thane-II confirmed the demand with interest and penalty and, therefore, the bank is before the CESTAT.

In their appeal they inter alia submitted that even if items of furniture etc. do not technically qualify under Rule 2(a) as capital goods, it definitely qualifies as 'input' under Rule 2(k) read with Rule 3 of CENVAT Credit Rules; club or association service has been utilized in organizing various meetings, conference, seminar etc. which is the essential for promoting the business; transport of goods by road services as it is transfer policy of the employees, so that it can conduct its business in effective and profitable way and accordingly, such expenses are incurred; cab and tour operator services/travel agents services, such services are essential for providing travel facility to the employees, as the appellant require its employees to travel between its different offices; services provided by Forex Broker are not exclusively used for the provisions of inter-bank forex trading as appellant is engaged in providing certain taxable services apart from the services of inter-bank trading in respect of which Forex Broker Services are availed; demand is hit by limitation. Reliance is also placed on the decision in Kisan Sahakar iChini Mills Ltd. - 2009-TIOL-2418-CESTAT-DEL.

The AR justified the order passed and pleads that the appellant be put to terms.

The Bench in a terse order observed -

“6. …, we find that the issue is debatable as regards the credit availed in respect of impugned goods being item of furniture etc. like sofa, almirah etc. and further there is prima facie case in favour of the appellant as regards the other inputs services on which CENVAT credit is availed. In this view of the matter, it is just and proper to direct the appellant to make the pre-deposit of Rs.40 lakhs and report compliance…”

(See 2014-TIOL-2627-CESTAT-MUM)