2014 (9) TMI 681 - AT - Central Excise

Denial of input service credit - Rent services - nexus with the manufacturing activity - Held that - any service availed by the assessee who is a manufacturer of excisable goods in the course of their business is entitled for CENVAT credit of the same. Therefore, under these circumstances, it is immaterial whether the rented premises is within the factory or outside but the same should be availed in the course of manufacture of final product. In this case, it is not disputed that the rented premises is not used for storage of manufactured goods by the appellant. Therefore, following the decision of Ultratech Cement Ltd. (2010 (10) TMI 13 - BOMBAY HIGH COURT) the appellants are entitled to input service credit of rent service - Decided in favour of assessee.

Summary

Issues: Denial of input service credit for rent services due to lack of nexus with manufacturing of final product and rented premises being outside factory premises.

Analysis:
1. The appellants appealed against the denial of input service credit for rent services, contending that the rent services availed had no nexus with the manufacturing of the final product, and thus did not qualify under Rule 2(l) of CENVAT Credit Rules, 2004. The authorities alleged that since the rented premises were outside the factory premises, the appellants were not entitled to CENVAT credit.

2. Despite the absence of representation from the appellants, a request for adjournment was received. However, given the narrow compass of the issue at hand, which was previously addressed by the Hon'ble High Court of Bombay in a relevant case, the requirement of pre-deposit was waived, and the appeal was taken up for final disposal.

3. Referring to the case of Ultratech Cement Ltd., the Tribunal highlighted that any service availed by a manufacturer of excisable goods in the course of their business is eligible for CENVAT credit. The court emphasized that the location of the rented premises, whether within or outside the factory, was immaterial as long as the services were utilized in the manufacturing process of the final product. In this instance, it was acknowledged that the rented premises were not used for storing manufactured goods by the appellant. Consequently, following the precedent set by the Ultratech Cement Ltd. case, the appellants were deemed entitled to input service credit for rent services.

4. As a result of the above analysis, the Tribunal allowed the appeal, overturning the impugned order that denied the input service credit. The stay application was also disposed of in favor of the appellants, thereby resolving the issue regarding the denial of CENVAT credit for rent services due to the perceived lack of nexus with the manufacturing process and the location of the rented premises outside the factory premises.