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TMI Blog2019 (3) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... capital goods were stored - Held that:- The premises were used by Wayne Burt for their job work manufacture of cylinders which were solely supplied to the appellant. The capital goods and the tooling equipment were thus kept in the premises where during the period, Wayne Burt was doing the manufacturing activity. Even though after the disputed period the capital goods were transferred to the appellant’s factory, since the premises was solely used by Wayne Burt for their manufacturing activities, the credit of service tax paid on rent of such premises is not eligible for credit - credit not allowed. Time limitation - Held that:- It is held in the impugned order that the issue is interpretational - the first issue is only a procedural laps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 4,71,391/- along with interest and also for imposing penalty of ₹ 2,35,696/- under Rule 15(2) of CCR r/w proviso to Section 11AC(1)(c) of the Central Excise Act, 1944. After due process of law, the original authority confirmed the demand, interest and imposed penalty. In appeal, Commissioner (Appeals) set aside the demand in respect of commission charges and also set aside the penalty. Aggrieved by the confirmation of demand in respect of credit availed on renting of immovable property service, the appellant has now approached the Tribunal. 2. On behalf of the appellant, ld. counsel Shri B. Seshagiri Rao appeared and argued the matter. 2.1 With respect of the first issue of service tax availed on rent and maintenance charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods which were stored therein was kept till it was brought into the factory. That therefore since the capital goods were later used for the manufacturing activity, the credit availed for the service tax paid on rent incurred for storing the capital goods is eligible. 2.3 The ld. counsel also argued on the ground of limitation. He adverted to para 5 of the Show Cause Notice and argued that the appellant had reflected the entire credit availed in their returns. Only during scrutiny of records, the department has objected to the availment of credit. The appellant had availed the credit on the bonafide belief that they are eligible for the same. Department had issued the Show Cause Notice only on 26.7.2016 for the period December 2013 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emicals. This agreement is a job work agreement wherein Wayne Burt has agreed to manufacture certain types of cylinders for the appellant. The premises was occupied by Wayne Burt as a job worker. The capital goods were also used by Wayne Burt for manufacturing activity on job work basis. He adverted to para 2.1 to 2.4, 5.1, 7.1 and 7.2 of the agreement. The appellant has agreed to pay the rent for the premises. The premises is used by Wayne Burt for job work activities and the goods stored were used by Wayne Burt during the disputed period. Though the rent is paid by the appellant, they are not eligible to avail the credit. The capital goods have not been used for the manufacture of the final products of the appellant and instead it has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit as such cannot be said to be not available to the appellant. 5.1 With regard to the second issue of credit availed of service tax on rent paid for premises wherein the capital goods are contended to have been stored, the argument of the ld. counsel for the appellant is that since subsequently the capital goods were used in the factory of the appellant, the credit is eligible. The ld. AR has drawn my attention to Manufacturing and Tooling Agreement dated 1.10.2013 entered between the appellant and Wayne Burt. From the agreement it is explicit that Wayne Burt was manufacturing hydraulic cylinder products for the appellant. Thus, the premises were used by Wayne Burt for their job work manufacture of cylinders which were solely sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. I do not find any contradictory version by the appellant for which reason also the conclusion arrived by the adjudicating authority cannot sustain. In the impugned order, the Commissioner (Appeals) has not discussed any facts so as to uphold the findings of the adjudicating authority with regard to invocation of extended period. Indeed it is held in the impugned order that the issue is interpretational. Moreover, as seen from the discussion made above, the first issue is only a procedural lapse. The department has not put forward any positive act of suppression of facts with intent to evade payment of duty. The credit availed in respect of first issue is only a procedural error. In the second issue, the rent was paid by appellant for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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