Helicopter used by Director - Cenvat Credit?

By Vijay Kumar

CAN a Company take Cenvat Credit on the Service Tax paid on the repair and maintenance of a helicopter used for transport of the Chairman and directors? This was the question before a CESTAT Bench recently. This is actually not res integra as they say. Way back in 2008, the Tribunal had in 2008-TIOL-1199-CESTAT-MUM, observed that in this modern age, use of aircraft is to be considered as a bare requisite for business purposes and held that any service tax paid on the services for the maintenance of aircraft is admissible as credit.

In the present case, Commissioner (Appeals) has not disputed the eligibility of credit, but has sought to deny it on the ground that the helicopter was not exclusively used for the assessee's unit. The Department argued before the Tribunal that the appellant failed to produce evidence that the helicopter was used for business purposes only, since it appears that the helicopter was used for the purpose of other companies also, as the Managing Director of this Company was also the Managing Director of other group companies at Mettur, Cuddalore and trips to such places have been proved.

The tribunal held, "The denial of credit is therefore incorrect and unsustainable."

For more details of this case, please see Breaking News.