Input service credit granted for rent services outside factory premises

The Tribunal allowed the appeal, overturning the denial of input service credit for rent services due to the rented premises being outside the factory premises. Rented premises' location was deemed immaterial as long as services were used in the manufacturing process. Following the Ultratech Cement Ltd. case, appellants were granted input service credit for rent services, resolving the issue and disposing of the stay application in their favor.

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Issues: Denial of input service credit for rent services due to lack of nexus with manufacturing of final product and rented premises being outside factory premises.

Analysis:
1. The appellants appealed against the denial of input service credit for rent services, contending that the rent services availed had no nexus with the manufacturing of the final product, and thus did not qualify under Rule 2(l) of CENVAT Credit Rules, 2004. The authorities alleged that since the rented premises were outside the factory premises, the appellants were not entitled to CENVAT credit.

2. Despite the absence of representation from the appellants, a request for adjournment was received. However, given the narrow compass of the issue at hand, which was previously addressed by the Hon'ble High Court of Bombay in a relevant case, the requirement of pre-deposit was waived, and the appeal was taken up for final disposal.

3. Referring to the case of Ultratech Cement Ltd., the Tribunal highlighted that any service availed by a manufacturer of excisable goods in the course of their business is eligible for CENVAT credit. The court emphasized that the location of the rented premises, whether within or outside the factory, was immaterial as long as the services were utilized in the manufacturing process of the final product. In this instance, it was acknowledged that the rented premises were not used for storing manufactured goods by the appellant. Consequently, following the precedent set by the Ultratech Cement Ltd. case, the appellants were deemed entitled to input service credit for rent services.

4. As a result of the above analysis, the Tribunal allowed the appeal, overturning the impugned order that denied the input service credit. The stay application was also disposed of in favor of the appellants, thereby resolving the issue regarding the denial of CENVAT credit for rent services due to the perceived lack of nexus with the manufacturing process and the location of the rented premises outside the factory premises.

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