2014 (5) TMI 451 - AT - Central Excise

CENVAT Credit - immovable property rent - Credit of service tax paid on immovable property rent on sales office has been denied on the ground that the same has been availed after the place of removal and therefore, is not covered under the definition of input services - Held that - It can be seen that words up to the place of removal figures in two places. The first is after word storage and second is after outward transportation . This would show that while defining input services wherever it is required and wherever the credit is to be restricted up to the place of removal , the relevant words were followed by suffix up to the place of removal . In the Circumstances, I consider that the appellant has made out prima facie case for complete waiver of pre-deposit - Stay granted.

Summary

Issues:
1. Denial of credit of service tax paid on 'immovable property rent' on sales office after the 'place of removal'.
2. Interpretation of the definition of 'input services' in relation to sales promotion activities.

Analysis:
The judgment deals with the denial of credit of service tax paid on 'immovable property rent' for a sales office after the 'place of removal'. The appellant argued that sales offices are involved in sales promotion activities, which are covered under the definition of 'input services', making them eligible for Cenvat credit. On the other hand, the Authorized Representative contended that credit is only available up to the 'place of removal', citing a previous decision by the Hon'ble High Court of Karnataka. The key question was whether the restriction on credit availability 'up to the place of removal' applies to input services as per the definition.

The definition of 'input services' includes various activities such as sales promotion, storage up to the place of removal, and outward transportation up to the place of removal. The judge noted that the phrase 'up to the place of removal' appears after 'storage' and 'outward transportation', indicating where the credit restriction applies. Considering this, the judge found that the appellant had a prima facie case for complete waiver of pre-deposit. As a result, the pre-deposit of the demand was waived, and there was a stay against recovery during the appeal process. The order was dictated and pronounced in open court by B S V Murthy, J.