Construction services eligible for CENVAT credit for renting immovable property

The Madras High Court upheld the Tribunal's decision that construction services are eligible for CENVAT credit to offer renting of immovable property services. The Court affirmed that construction is necessary for providing renting services and dismissed the Revenue's appeal, along with the connected CMP.

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Issues:
1. Utilization of CENVAT credit for different services
2. Correctness of allowing entire CENVAT credit availed by the respondent
3. Eligibility of input service credit under 'commercial or industrial construction service'
4. Quantum of credit availed on construction services for leased out portion

Analysis:
The appeal before the Madras High Court involved the utilization of CENVAT credit for different services and the correctness of allowing the entire credit availed by the respondent. The assessee, engaged in manufacturing PU foam, availed CENVAT credit for 'commercial or industrial construction service' to pay service tax for 'renting of immovable property services.' The Department contended that the credit was not used for manufacturing products due to leasing a portion of the factory premises. The Tribunal considered the definition of 'input service' and noted that construction services are essential for providing output services like renting immovable property. Referring to precedents, the Tribunal held that construction service is eligible for credit for renting immovable property services.

Regarding the eligibility of input service credit under 'commercial or industrial construction service,' the Tribunal emphasized that construction is a prerequisite for providing renting of immovable property services. The Tribunal's decision was based on the understanding that without construction, renting services cannot be delivered. The High Court concurred with the Tribunal's reasoning, affirming that construction service qualifies for credit to offer renting of immovable property services. The Court found no error in the Tribunal's decision and dismissed the civil miscellaneous appeal, answering the substantial questions of law against the Revenue. Consequently, the connected CMP was also dismissed.

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