2021 (4) TMI 121 - AT - Service Tax

CENVAT credit - input services - renting of premises for business purposes - premises being leased out by M/s. GSPL to the appellants for being used as a godown / storage space for the inputs - inputs has been used exclusively by the appellant or by its subsidiary and associated companies as well - requirement of mandatory permission from Deputy/Assistant Commissioner of Central Excise in terms of Rule 8 of the Cenvat Credit Rules - HELD THAT - The service in question i.e. renting of immovable property is very well covered in means as well as includes clause of the definition of the input service as given under Rule 2 (I) of Cenvat Credit Rule, 2004. This Rule allows Cenvat Credit of all such services that are used in or in relation to the manufacture of finished goods. There is no denial on part of the Department that the premises taken on lease were used for the storage of raw-material required for the manufacture of tyres, the finished goods of the appellant. The service availed is definitely a service in relation to the manufacture of tyres. Also the Cenvat Credit of input services used for storage upto the place of removal and for procurement of inputs are admissible for Cenvat Credit - There is no apparent role of any subsidiary or associated company of the appellant nor there is anything on record which may prove the availment of the impugned service by the said subsidiary/associated companies of the appellants as well - the issue stands decided in favour of the appellant. Requirement of mandatory permission from Deputy/Assistant Commissioner of Central Excise in terms of Rule 8 of the Cenvat Credit Rules - HELD THAT - Rule 8 makes it abundantly clear that scope of this rule is for reversal of credit of Cenvatable inputs. It is also clear that the permission is required only in cae of the storage of excisable raw-material. It is not the fact for the present appeal. Appellant has submitted that the input stored in the premises was non-excisable. There is no denial by the Department nor there is allegation in the Show Cause Notice about the inputs to be excisable - Rule 8 has wrongly been invoked by the Department while denying the admissibility of Cenvat Credit to the appellants for his raw-material to have been stored in the impugned leased premises taken on lease by the appellant exclusively from M/s. GSPL and being in use by the appellant exclusively - This issue is also held decided in favour of the appellant. Extended period of limitation - HELD THAT - It is observed that admittedly appellant was regularly filing its return and was discharging the duty liability. There is nothing on record to prove the alleged concealment of any material information by the appellant from the Department. Admittedly there had been a routine audit of the appellants conducted by the Department. The question of concealment or suppression of any relevant information does not at all arise on part of the appellant. Thus extended period cannot be invoked. Penalty - HELD THAT - As there are no suppression or fraud, there arises no question of imposition of penalty upon the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Exclusive use of leased premises by the appellant.
2. Requirement of permission under Rule 8 of Cenvat Credit Rules for storing inputs outside the factory.
3. Invocation of extended period of limitation and imposition of penalties.

Detailed Analysis:

Issue 1: Exclusive Use of Leased Premises
The appellant entered into a lease agreement with M/s. Grover Stainless Pvt. Ltd. (GSPL) for premises to store non-excisable inputs due to insufficient storage space at their own premises. The Department contended that the premises were used by the appellant’s subsidiaries and associated companies, citing Clause 5(b) of the lease agreement. However, the Tribunal observed that Clause 3 of the lease agreement specified the premises were for the appellant’s use only, with no mention of subsidiaries or associated companies. The Department failed to provide evidence that the premises were used by entities other than the appellant. The Tribunal concluded that the confirmation of the proposal based on presumption was unwarranted, and the Cenvat Credit availed by the appellant was valid.

Issue 2: Permission Under Rule 8 of Cenvat Credit Rules
Rule 8 pertains to the storage of inputs outside the factory and requires permission from the Deputy/Assistant Commissioner of Central Excise. The Tribunal noted that Rule 8 is applicable for the reversal of credit of Cenvatable inputs and is relevant only for excisable raw materials. The appellant stored non-excisable inputs, and there was no evidence or allegation from the Department that the inputs were excisable. The Tribunal held that Rule 8 was wrongly invoked by the Department, and the Cenvat Credit was admissible for the appellant.

Issue 3: Extended Period of Limitation and Penalties
The Show Cause Notice invoked the extended period of limitation for the demand covering April 2013 to January 2017, alleging suppression of facts. The Tribunal observed that the appellant regularly filed returns, discharged duty liability, and was audited by the Department. There was no evidence of suppression, fraud, or collusion. The Tribunal relied on the decision of the Hon’ble Apex Court in CCE, Jalandhar vs. Royal Enterprises, concluding that the extended period of limitation was not applicable, and penalties were not warranted.

Conclusion:
The Tribunal set aside the order of the adjudicating authority, holding that the demand was based on presumption without evidence. The appeal was allowed, and the Cenvat Credit availed by the appellant was deemed valid.