Appellant wins Cenvat credit appeal for renting services due to non-residential use

The appellant, a 100% EOU registered under STPI scheme, was denied Cenvat credit on Service Tax paid for renting immovable property services in Chennai. The denial was based on the premises not being the registered manufacturing location. The Member (T) found no requirement for services to be received in a specific location and noted the non-residential use of the premises for business activities. The denial basis was deemed unsustainable, and the appellant's appeal was allowed immediately, emphasizing eligibility assessment based on rules and criteria rather than arbitrary location requirements.

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Issues: Cenvat credit on renting of immovable property service; Denial of credit based on location of service receipt and registration status of premises; Applicability of credit rules and eligibility criteria.

In this case, the issue revolved around the denial of Cenvat credit on Service Tax paid for renting immovable property services received by the appellant-company in Chennai. The credit amounting to &8377;1,07,120/- was deemed irregularly availed and demanded with interest, with a penalty of &8377;10,000/- imposed under Rule 15 of Cenvat Credit Rules, 2004. The appellant, a 100% EOU registered under STPI scheme, argued that the services were utilized for providing CAD design to customers in Chennai and that the denial was solely based on the premises not being the registered manufacturing location. The original adjudicating authority acknowledged the service usage for output services but rejected the credit due to the premises not being registered under the Service Tax statute.

Upon thorough consideration, the Member (T) found that there is no stipulation requiring input services to be received in the manufacturing premises or in a registered location. The lease agreement between the appellant and the premises owner indicated non-residential use for business activities, supporting the eligibility for credit. It was concluded that the denial basis was unsustainable, and the appellant had a strong case for credit eligibility. As a result, the impugned order was set aside, and the appeal was allowed with immediate effect, without the need for further postponement or stay, in the interest of justice. The judgment emphasized the importance of assessing eligibility based on the applicable rules and criteria rather than arbitrary location or registration requirements.

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