Tribunal affirms CENVAT credit eligibility for renting property used in manufacturing activities

The Tribunal upheld the Commissioner (Appeals)'s decision, emphasizing that renting immovable property services qualify as "input services" under the Cenvat Credit Rules if manufacturing activities take place at the rented premises. The denial of CENVAT credit based on the property's location differing from the registered premises was deemed unjustified, as evidenced by invoices showing manufacturing activities at the rented location. The appeal by the Revenue was rejected, affirming that the connection between renting property and manufacturing activity warrants the availing of CENVAT credit.

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Issues:
1. Appeal against Order-in-Appeal denying CENVAT credit on service tax paid for renting immovable property.
2. Interpretation of "input service" under Rule 2(1)(ii) of Cenvat Credit Rules, 2004.
3. Connection between renting of property and manufacturing activity for availing CENVAT credit.

In the present case, the Revenue filed an appeal against the Order-in-Appeal denying CENVAT credit to the respondents for service tax paid on renting immovable property. The Department alleged that the renting services did not qualify as "input services" under Rule 2(1)(ii) of the Cenvat Credit Rules, 2004, as they were not directly or indirectly used in relation to manufacturing final products. The original authority referred to a government circular clarifying that tax on rent paid is eligible as input credit if the commercial activity involves provision of taxable service or manufacture of dutiable goods. The original authority examined the lease deed agreement and denied the benefit, stating that the renting of property at a different location than the registered premises had no connection with the manufacturing activity. The respondents challenged this decision, and the Commissioner (Appeals) allowed their appeal, citing a Tribunal's decision and holding that renting of immovable property services fell under the definition of input services.

Upon review, it was found that the eligibility of CENVAT credit for renting services was accepted by the original authority and was not contested before the Commissioner (Appeals) by the Department. The denial of benefit was solely based on the property's location differing from the registered premises. The respondents provided invoices from the property's location where manufacturing activities were conducted, supporting their claim. As manufacturing took place at the rented premises, the CENVAT credit could not be denied. The Tribunal upheld the Commissioner (Appeals)'s decision, stating there was no flaw in the findings, and rejected the Revenue's appeal.

This judgment clarifies the interpretation of "input service" under the Cenvat Credit Rules, emphasizing the connection between renting immovable property and manufacturing activity for availing CENVAT credit. The decision underscores that if manufacturing activities occur at a rented premises, the benefit of CENVAT credit cannot be denied based solely on the property's location differing from the registered premises.

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