+ The definition of input service is contained in Rule 2(l) of the Cenvat Credit Rules 2004 and relates to any service used by a manufacturer, whether directly or indirectly, in or in relation to manufacture of their final product and includes many services specified therein but excludes some of the services specified. An Exclusion Clause B was introduced w.e.f. 01.04.2011 to the following effect:
"[(b) [Services provided by way of renting of a motor vehicle], in so far as they relate to a motor vehicle which is not a capital goods;]"
+ A reading of the above Exclusion Clause show that services provided by way of renting of a motor vehicle do not stand excluded in totality. The Exclusion Clause is in respect of input services of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not capital goods.
+ The contention of the assessee is that motor vehicle is a capital goods, as per the definition of the capital goods contained under Rule 2(a) of the Cenvat Credit Rules 2004. The appellate authority has specifically observed that the said input service i.e. renting of "motor vehicles" have been specifically included except in case where motor vehicle is eligible for Cenvat Credit as capital goods.
+ He has however denied the benefit to the assessee on the ground that such motor vehicle are not capital goods for the appellant, Cenvat Credit availed on the input services of renting of motor vehicle would not be admissible.
+ There is a flaw in the above interpretation of appellate authority. A person who is receiving the input services of renting of immovable property, can never avail cenvat credit of duty paid on the motor vehicles and as such motor vehicle can never be a capital good to the recipient of the said services. The motor vehicle will always be a capital good or otherwise for the person who is providing the services. For service provider falling under the category of renting of motor vehicle the motor vehicle would always be a capital good. As such the expression- "which is not a capital good appearing in the said exclusion clause would require examination vis-a-vis the service provider and not vis-a-vis the services recipient." As such the interpretation of the lower authorities that motor vehicle are not capital goods for the services recipient cannot be appreciated in as much as motor vehicles are admittedly capital goods in terms of the Rule 2 (A) of Cenvat Credit Rules.
+ In view of the above analysis it is held that the appellant would be entitled to the Cenvat Credit on service tax paid on the said services.
(See 2016-TIOL-3071-CESTAT-DEL)