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TMI Blog2019 (5) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroduced with effect from 01.04.2011, the services of setting up of factory as also activities relating to business of manufacture were deleted. Thus, for the period prior to 01.04.2011, the credit availed on construction services for setting up of factory was eligible. The Department does not have a case that the respondents have used the construction services for setting up of a building or civil structure which is not a factory. The allegation is that the factory was set up using the construction services and thereafter, part of the factory was leased out to another without being used in the manufacture of final products. When credit is eligible for setting up of factory and the respondents have correctly utilized the construction services for setting up of the factory, the same cannot be denied alleging that a part or portion of the factory was leased out to another. Invocation of Rule 3(5) of the CENVAT Credit Rules, 2004 - HELD THAT:- Rule 3(5) ibid speaks about reversal of credit availed on inputs or capital goods when such goods are cleared as such. There is no allegation in the Show Cause Notice that inputs or capital goods have been cleared as such - demand in the SCN do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the building itself is ineligible. The credit availed on the premises rented out to another person is not related to the manufacturing of the goods and hence, the credit becomes ineligible. The assessee has thus contravened the provisions of the CENVAT Credit Rules, 2004 in as much as the input services have not been used in or in relation to the manufacture of final products. The services cannot be treated as input services as the premises were not used in the manufacture, but have been leased out. 3.2 The case laws relied upon by the Commissioner (Appeals) are regarding 'inputs' removed as such, on which the service tax credit was availed whereas the case on hand is not about 'inputs' but about service tax credit availed on 'input services'. In the case of Commissioner of C.Ex., Nagpur Vs. M/s. Ultratech Cement Ltd. reported in 2010 (260) E.L.T. 369 (Bom.), the Department has filed SLP before the Hon'ble Supreme Court, which is still pending decision. So also, in the case of M/s. ABB Ltd Vs. Commissioner Of C.Ex. & S.T., Bangalore reported in 2009 (15) S.T.R. 23 (Tri. - LB), the basic condition for availing CENVAT Credit is that such services are to be utilized in or in relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent had leased out part of the factory premises, the credit is not reversible since the respondent started paying service tax on the leased out portion with effect from 01.06.2007 under the category of 'Renting of Immovable Property Services' when such services became taxable. 4.5 He also submitted that the extended period of limitation is not invokable and that the entire demand is time-barred. The respondent was under the bona fide belief that the credit is eligible. The issue involves interpretation of legal provisions. Further, there is no mala fide alleged against the respondent with an intention to evade payment of service tax. Therefore, there are no grounds for invoking the extended period of limitation. So also, he prayed that the penalties may be set aside. 5. Heard both sides. 6. The Department is aggrieved by the order passed by the Commissioner (Appeals) who allowed the credit availed by the respondent with respect to the portion of the factory premises that was rented out to another. 7. From the facts it is brought out that, at the time of availing the credit, the respondent was using the factory. In other words, at the time of availing the credit, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of M/s. Ultratech Cement Ltd. (supra) is reproduced as under : "33. It is argued on behalf of the Revenue that not only the ratio but the decision of the Apex Court in the case of Maruti Suzuki Ltd. (supra) must be applied ipso facto to hold that the credit of service tax paid on outdoor catering services is allowable only if the said services are used in relation to the manufacture of final products. That argument cannot be accepted because unlike the definition of input, which is restricted to the inputs used directly or indirectly in or in relation to the manufacture of final products, the definition of "input service' not only means services used directly or indirectly in or in relation to manufacture of final products, but also includes services used in relation to the business of manufacturing the final products. Therefore, while interpreting the words used in the definition of 'input service', the ratio laid down by the Apex Court in the context of the definition of 'input' alone would apply and not the judgment in its entirety. In other words, by applying the ratio laid down by the Apex Court in the case of Maruti Suzuki Ltd. (supra), it cannot be said that the definit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e outdoor catering services being integrally connected with the business of the manufacture of cement, credit of service tax paid out on catering services has been rightly allowed by the Tribunal." 8.3 Similarly, leasing out a part of the factory which is not used by the manufacturer and that too, to their joint venture partner, can help the manufacturer in raising funds or other business benefits. Such activities which are used in relation to the business of manufacture would be covered by the inclusive part of the definition. 9. Again, it has to be said that in the definition reproduced above, during the relevant period, the services relating to setting up of factory was an eligible input service. By the amendment which was introduced with effect from 01.04.2011, the services of setting up of factory as also activities relating to business of manufacture were deleted. Thus, for the period prior to 01.04.2011, the credit availed on construction services for setting up of factory was eligible. 10. The Department does not have a case that the respondents have used the construction services for setting up of a building or civil structure which is not a factory. The allegation i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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