2013 (12) TMI 1628 - AT - Service Tax

100% EOU - CENVAT credit - input services - renting of immovable property service - credit has been denied only on the ground that services were not received in the manufacturing premises and the premises where it has been received was not registered under Service Tax statute - Held that - There is no such requirement as far as the input services are concerned that the same should have been received in the manufacturing premises and the premises where received should be registered one - appellant has made out a very strong case for eligibility of the credit. The matter does not require any further consideration since the basis on which credit was denied is not at all sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues: Cenvat credit on renting of immovable property service; Denial of credit based on location of service receipt and registration status of premises; Applicability of credit rules and eligibility criteria.

In this case, the issue revolved around the denial of Cenvat credit on Service Tax paid for renting immovable property services received by the appellant-company in Chennai. The credit amounting to &8377;1,07,120/- was deemed irregularly availed and demanded with interest, with a penalty of &8377;10,000/- imposed under Rule 15 of Cenvat Credit Rules, 2004. The appellant, a 100% EOU registered under STPI scheme, argued that the services were utilized for providing CAD design to customers in Chennai and that the denial was solely based on the premises not being the registered manufacturing location. The original adjudicating authority acknowledged the service usage for output services but rejected the credit due to the premises not being registered under the Service Tax statute.

Upon thorough consideration, the Member (T) found that there is no stipulation requiring input services to be received in the manufacturing premises or in a registered location. The lease agreement between the appellant and the premises owner indicated non-residential use for business activities, supporting the eligibility for credit. It was concluded that the denial basis was unsustainable, and the appellant had a strong case for credit eligibility. As a result, the impugned order was set aside, and the appeal was allowed with immediate effect, without the need for further postponement or stay, in the interest of justice. The judgment emphasized the importance of assessing eligibility based on the applicable rules and criteria rather than arbitrary location or registration requirements.