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 ... Waiver of pre deposit - Denial of CENVAT Credit - Renting of immovable property - Held that:- prima facie case found for the appellant against the denial of Cenvat credit on renting of immovable property service, in view of the Hon’ble High Court’s judgment in the case of CCE v. Stanzen Toyotetsu India (P) Ltd. - [2011 (4) TMI 201 - KARNATAKA HIGH COURT]. Prima facie, the findings recorded by the High Court in paragraph 10 of its judgment are in support of the appellant who claims that the registered premises were used in relation to activities relating to their business. Having obtained the above registration with the department, the appellant is entitled to receive taxable services and distribute credit of service tax paid thereon to their manufacturing units. Prima facie, as the registered premises were used in relation to activities relating to the business of manufacture of excisable goods, Cenvat credit of service tax paid on the taxable service of renting of such premises, is prima facie admissible - Stay granted. 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.