2012 (1) TMI 118 - AT - Central Excise

CESTAT grants waiver on denied Cenvat credit for renting property as input service

The Appellate Tribunal CESTAT BANGALORE granted waiver and stay to the appellant regarding the denial of Cenvat credit for renting immovable property as ... Renting of immovable property as an input service - distribution of Cenvat credit to manufacturing units - registration under Section 69 of the Finance Act, 1994 and Rule 3 of the Service Tax (Registration of Special Persons) Rules, 2005 - prima facie entitlement to Cenvat credit - waiver of pre-deposit and stay of recoveryRenting of immovable property as an input service - distribution of Cenvat credit to manufacturing units - registration under Section 69 of the Finance Act, 1994 and Rule 3 of the Service Tax (Registration of Special Persons) Rules, 2005 - prima facie entitlement to Cenvat credit - Admissibility of Cenvat credit on service tax paid for renting of immovable property used by the appellant for business activities including distribution of credit to manufacturing units for the period June 2007 to March 2009. - HELD THAT: - The Tribunal found a prima facie case in favour of the appellant. The rented premises were registered with the department under the statutory registration scheme and were used inter alia for distribution of Cenvat credit to the company's manufacturing units. Relying on the High Court's reasoning in CCE v. Stanzen Toyotetsu India (P) Ltd., and specifically the findings recorded in paragraph 10 of that judgment, the Tribunal held that where registered premises are used in relation to activities of the business of manufacture of excisable goods, service tax paid on renting of such premises is prima facie admissible as Cenvat credit. The finding rests on the registration and the use of the premises for business-related activities linked to manufacture, as evidenced by the registration certificate produced. [Paras 2]Prima facie admissible Cenvat credit on renting of immovable property for the stated period.Waiver of pre-deposit and stay of recovery - Interim relief sought by the appellant in the form of waiver of pre-deposit and stay of recovery of the adjudged dues. - HELD THAT: - On the basis of the prima facie conclusion regarding admissibility of Cenvat credit and having considered the submissions of both parties, the Tribunal allowed interim relief. The Tribunal recorded satisfaction with the appellant's case at the prima facie stage and granted waiver of pre-deposit and a stay on recovery of the adjudged amounts pending further proceedings. [Paras 3]Waiver of pre-deposit granted and recovery stayed.Final Conclusion: The Tribunal found a prima facie entitlement to Cenvat credit on renting of immovable property used for business and distribution of credit to manufacturing units for June 2007 to March 2009, and accordingly granted waiver of pre-deposit and a stay of recovery of the adjudged dues. Issues:1. Denial of Cenvat credit for renting of immovable property as an 'input service' under Cenvat Credit Rules, 2004.Analysis:The Appellate Tribunal CESTAT BANGALORE considered applications seeking waiver and stay regarding Cenvat credit amounts and penalties. The lower authorities had denied Cenvat credit to the appellant for the period from June 2007 to March 2009 concerning renting of immovable property not recognized as an 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004. The rented premises were used for housing the appellant's office for business activities, including distribution of Cenvat credit to various manufacturing units. It was established that the premises were registered with the department under relevant rules. The Tribunal found a prima facie case for the appellant against the denial of Cenvat credit based on the judgment of the Hon'ble High Court in a similar case. The High Court's findings supported the appellant's claim that the registered premises were used in activities related to their business, entitling them to receive taxable services and distribute service tax credit to their manufacturing units.The Tribunal held that as the registered premises were utilized in activities related to the business of manufacturing excisable goods, the Cenvat credit of service tax paid on the taxable service of renting such premises was prima facie admissible to the appellant. Consequently, the Tribunal granted waiver of pre-deposit and stay of recovery concerning the adjudged dues. The decision was pronounced and dictated in open court, providing relief to the appellant in the matter of Cenvat credit for renting immovable property.