2017 (4) TMI 788 - AT - Central Excise

CENVAT credit - Godown Charges - denial on account of nexus - Held that - the Service Tax paid on Godown Charges was in connection with storage imported inputs/raw materials by the appellant in their respective godowns - also, the appellants were not engaged in trading of the imported goods from the said premises but, took dealers registration, so as to enable them to issue invoices to their own units for availing Cenvat Credit - credit allowed - appeal allowed - decided in favor of assessee.

Summary

Issues:
Admissibility of Cenvat Credit on 'Godown Charges' for storage of imported raw materials.

Analysis:
The appeal was filed against the order passed by the Commissioner of Central Excise, Customs, and Service Tax (Appeals) regarding the admissibility of Cenvat Credit on 'Godown Charges' amounting to ?49,564/- and ?8,258/- for the years 2008-09, 2009-10, and 2010-11. The appellant stored imported raw materials in a godown and availed credit on the service tax paid for storage. The Revenue contended that the credit was not admissible as the appellant was registered as a dealer and engaged in trading activities. The appellant argued that the godown was used for distributing goods to their own units, not for trading, and relied on a tribunal decision to support the admissibility of the credit.

The appellant's advocate highlighted that the godown was utilized for distributing goods to their own units, not for trading purposes. They argued that the service tax paid on storage of raw materials had a nexus with the manufacturing activity, making it eligible for Cenvat Credit. The advocate referenced a tribunal decision in Kites Industries India Ltd vs CCE&ST to support their argument.

The Revenue's authorized representative reiterated the findings of the Commissioner (Appeals) regarding the inadmissibility of the credit based on the appellant's dealer registration and trading activities. However, the tribunal, after considering the facts and submissions, found that the Service Tax paid on 'Godown Charges' was directly related to the storage of imported inputs/raw materials by the appellant. It was noted that the appellant was not involved in trading activities from the premises but used the dealers' registration to issue invoices to their own units for availing Cenvat Credit. Citing the precedent set in Kites Industries India Ltd's case, the tribunal held that the Service Tax paid for storage of raw materials qualified as an 'input service' under the CCR, 2004, making it eligible for Cenvat Credit.

Consequently, the tribunal set aside the impugned order and allowed the appeal with any consequential relief as per the law. The judgment emphasized the importance of the nexus between the service tax paid and the manufacturing activity for determining the admissibility of Cenvat Credit on 'Godown Charges' related to storage of imported raw materials.