2013 (6) TMI 322 - AT - Central Excise

Recovery of cenvat credit of service tax paid on rent charged for facilitating display of the appellants goods in New Delhi and various places - as per dept. such services did not qualify as input services defined in Rule 2(1) of Cenvat Rules 2004 - extended period of limitation invoked - Held that - As can be seen from the reproduced certificate where the chartered accountant has clearly and categorically stated that the expenses are considered under the selling and distribution overhead which understandably goes into the costing of the final product. As relying on case of Bharat Fritz Werner Ltd. 2011 (2) TMI 1276 - CESTAT BANGALORE the services were utilized by the appellant for the purpose of enhancement of his business. As decided in M/s. Coca Cola India Pvt. Ltd. Versus The Commissioner of Central Excise Pune-III 2009 (8) TMI 50 - BOMBAY HIGH COURT each limb of the definition can be considered as independent eligible for exemption. If that be so in the factual matrix of this case as the said services were directly or indirectly used for the purpose of their business credit cannot be denied. Accordingly impugned order is set aside and appeal is allowed with consequential relief. The appellant has made out the case in his favour.

Summary

Issues:
- Eligibility of the appellant to avail Cenvat credit of service tax paid on renting of property.

Detailed Analysis:
1. The appellant, a manufacturer of vitrified tiles, availed Cenvat credit of service tax paid on rent for displaying goods. A show cause notice was issued proposing recovery of the credit amount along with interest and penalty. The adjudicating authority confirmed the recovery and imposed penalties.

2. The appellant appealed, arguing that the rented properties were used in the course of business. The first appellate authority disagreed, leading to the current appeal.

3. The central issue was the eligibility of the appellant to claim Cenvat credit on service tax paid for renting property. The appellant contended that the rented properties were essential for their business activities, relying on precedents to support their case.

4. The appellant produced a chartered accountant certificate indicating that the rent expenses were part of selling and distribution overhead, influencing the final product's costing.

5. Referring to a previous Tribunal decision, the judge highlighted the importance of services directly or indirectly used in or in relation to the manufacture of final products or their clearance from the place of removal.

6. The judge emphasized that each aspect of the definition of input service should be considered independently for eligibility, citing a High Court ruling to support this interpretation.

7. Considering the factual matrix and the direct or indirect use of the rented properties for business purposes, the judge found in favor of the appellant. The impugned orders were set aside, and the appeals were allowed with consequential relief.

8. The judge did not delve into the submissions made by the appellant, as the lower authorities had already addressed the issue beyond the allegations in the show-cause notice.

9. Ultimately, the appellant successfully argued for the eligibility of Cenvat credit on service tax paid for renting properties, leading to the reversal of the impugned orders and the allowance of the appeals with any necessary consequential relief.