2017 (7) TMI 980 - AT - Central Excise

Renting of immoveable property service - road used by the appellant - denial on the ground that the road located outside the factory of the respondent and it is not used in or in relation to the manufacture of final product - Held that - even though the road is located outside the factory premises but the service of renting of immoveable property is received and used by the respondent. The road is used for transportation of goods which is directly related to the manufacture of final product in their factory - the service of renting of road to the respondent is an input service and the credit is admissible - appeal dismissed - decided against Revenue.

Summary

Issues:
- Disallowance of cenvat credit for renting of immoveable property service in respect of road used by appellant
- Whether road used for transportation of goods related to manufacture qualifies as input service

Analysis:
1. The case involved the disallowance of cenvat credit for renting of immoveable property service in respect of a road used by the appellant. The original authority disallowed the credit on the grounds that the road was located outside the factory premises and not used in or in relation to the manufacture of the final product.

2. The Revenue argued that since the road was outside the factory premises, it did not qualify as an input service. They relied on various judgments to support their position, emphasizing that the location of the road was crucial in determining admissibility of credit.

3. On the other hand, the Respondent contended that there was no specific criteria mandating that an input service must be used within the factory premises. They argued that the road was essential for transporting goods meant for production in the factory, directly contributing to the manufacturing process.

4. The Tribunal considered both arguments and concluded that even though the road was outside the factory, it was used by the respondent for transportation of goods directly related to the manufacture of the final product. Referring to Rule 2(a) of Cenvat Credit Rules, 2004, the Tribunal held that if a service is used in or in relation to the manufacture of the final product and overall business activity, the credit is admissible.

5. After reviewing the cited judgments, the Tribunal determined that the service of renting the road to the respondent qualified as an input service, making the cenvat credit admissible. Consequently, the impugned order disallowing the credit was upheld, and the Revenue's appeals were dismissed.

6. The judgment was pronounced on 29/06/2017, with the Tribunal affirming the decision in favor of the Respondent regarding the admissibility of cenvat credit for the renting of the road used for transportation of goods related to the manufacturing process.