2014 (3) TMI 636 - AT - Central Excise

Availment of CENVAT Credit - Whether the applicant is eligible to avail the credit in respect of service tax paid on the rent of immovable property to corporate office situated at Kolkata - Held that - rent paid for corporate office will form part of cost of production. It is also seen that the Tribunal in the case of National Engineering Industries (2013 (6) TMI 590 - CESTAT NEW DELHI) held that rent paid for corporate office would come within the purview of Rule 2(l) of CENVAT Credit Rules, 2004. Accordingly, I grant waiver of predeposit of entire amount of duty along with interest and penalty and stay its recovery thereof during the pendency of the appeals - Stay granted.

Summary

Issues Involved:
Whether the applicant is eligible to avail CENVAT credit on service tax paid for renting immovable properties for corporate office.

Analysis:
The judgment by the Appellate Tribunal CESTAT Chennai involved a common issue regarding the eligibility of an applicant to avail CENVAT credit on service tax paid for renting immovable properties for a corporate office. The applicant, engaged in manufacturing Titanium-di-oxide and ferrous sulphate, sought credit on input services related to renting immovable properties. The key question was whether the rent paid for the corporate office situated in Kolkata would be considered eligible for CENVAT credit. The learned Advocate for the applicant cited precedents like National Engineering Industries Ltd. Vs. CCE, Jaipur and Jaypee Rewa Plant Vs. CCE, Bhopal to support their claim. On the other hand, the Revenue representative argued that there was no nexus between the corporate office and the manufacturing factory. However, the Tribunal disagreed with the Commissioner (Appeals) and relied on the decision in National Engineering Industries to rule that rent paid for a corporate office falls under Rule 2(l) of CENVAT Credit Rules, 2004. Consequently, the Tribunal granted a waiver of predeposit of duty, interest, and penalty, and stayed the recovery during the appeal process, thereby allowing the stay applications.

In conclusion, the judgment clarified the eligibility of the applicant to avail CENVAT credit on service tax paid for renting immovable properties for a corporate office. By considering relevant precedents and rules, the Tribunal determined that such rent expenses are part of the cost of production and fall within the purview of CENVAT Credit Rules. The decision to grant a waiver of predeposit and stay the recovery during the appeal process indicates a favorable outcome for the applicant based on the interpretation of the law and previous judgments.