2017 (10) TMI 962 - AT - Central Excise

CENVAT credit - input services - Renting of immovable property service - insurance services - Held that - Since the appellants were not having sufficient space in the factory to store the inputs and the packing material, therefore, they had taken the premises outside the factory and also took the dealer s registration only exclusively to the appellant s factory and the goods have not been sold or removed to any other person, which fact has not been denied by the Revenue - storage is directly connected to the production - the appellant has produced the receipt of insurance premium and which shows that the insurance is with regard to the finished products and other property of the appellant in the factory. The appellants are entitled to the CENVAT Credit on service tax paid on rent of dealer s premises which is nothing but an extension of the factory of the appellant - appellants are entitled to the CENVAT credit on security services availed for dealer s premises as well as insurance paid for the finished goods stored in the factory premises - appeal allowed.

Summary

Issues:
1. Irregular availing of CENVAT credit on input services.
2. Rejection of refund claim by the Assistant Commissioner.
3. Validity of CENVAT credit on rent of dealer's premises, security services, and insurance for finished goods.

Analysis:
1. The appeal challenged the Commissioner (A)'s order rejecting the appellant's appeal and upholding the Order-in-Original due to irregular availing of CENVAT credit on input services. The appellant had availed credit on services not related to the manufacturing unit, such as renting of immovable property and security agency services at different premises. The Department pointed out the irregularities, leading the appellant to reverse the credit and file a refund, which was later rejected by the Assistant Commissioner. The appellant argued that the services were essential for manufacturing and provided evidence to support their claim. The Tribunal found in favor of the appellant, allowing the CENVAT credit on these services.

2. The Assistant Commissioner had rejected the refund claim, prompting the appellant to appeal to the Commissioner (A), who also upheld the rejection. The appellant contended that the impugned order did not properly appreciate the facts and submitted evidence to support their claim. The Tribunal, after considering submissions from both parties and reviewing the material, found in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief.

3. The issue of the validity of CENVAT credit on rent of dealer's premises, security services, and insurance for finished goods was extensively discussed. The appellant had taken a godown on rent outside the factory premises due to space constraints, exclusively used for storing raw materials for manufacturing final products. The Tribunal noted that the godown was directly connected to production and the services were essential for the manufacturing process. The Tribunal found that the appellant was entitled to the CENVAT credit on rent of dealer's premises, security services, and insurance for finished goods, as these services were integral to the manufacturing operations. Consequently, the impugned order was set aside, and the appeal of the appellant was allowed with consequential relief.