Tribunal allows Cenvat Credit for taxable services on capital goods denying manufacturing of exempted goods.

The Tribunal affirmed that the respondent was entitled to avail Cenvat Credit on capital goods as they were used for providing taxable services, not for manufacturing exempted goods. The appeal was dismissed, and all pending miscellaneous applications were disposed of.

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Issues Involved:
1. Eligibility of Cenvat Credit for capital goods used in manufacturing exempted goods.
2. Classification of services under "Business Support Service" versus "Renting of Immovable Property".
3. Limitation period for issuing Show Cause Notices.
4. Entitlement of the respondent to avail Cenvat Credit on capital goods.

Detailed Analysis:

1. Eligibility of Cenvat Credit for Capital Goods Used in Manufacturing Exempted Goods:
The appellant/revenue challenged the Tribunal's order allowing Cenvat Credit on capital goods installed for manufacturing exempted goods, arguing that eligibility should be determined based on the dutiability of the final product at the time of receipt of capital goods. The Tribunal, however, found that the respondent had not manufactured any exempted goods and had leased the premises to another company, thus becoming a service provider. The Tribunal held that the respondent was entitled to avail Cenvat Credit as the capital goods were used for providing taxable output services.

2. Classification of Services under "Business Support Service" versus "Renting of Immovable Property":
The appellant contended that the services provided by the respondent should be classified under "Renting of Immovable Property" rather than "Business Support Service". The Tribunal, after examining the "Wet Lease Agreement" between the respondent and the lessee, concluded that the service provided was composite and fell under "Business Support Service", which is a taxable service. This classification allowed the respondent to avail Cenvat Credit on the capital goods used.

3. Limitation Period for Issuing Show Cause Notices:
The appellant argued that the Show Cause Notice issued for the recovery of wrongly availed Cenvat Credit was within the limitation period. The Tribunal, however, noted that the Show Cause Notice dated 13.07.2010, related to the years 2006-2007, 2007-2008, and 2008-2009, was issued beyond the permissible period of one year from the last date of filing ST-3 Returns. The Tribunal found no evidence of suppression of facts by the respondent and held that the notice was barred by limitation. Conversely, the Show Cause Notice dated 18.10.2010, for the year 2009-2010, was within the limitation period, and the respondent had already deposited the wrongly availed credit amount.

4. Entitlement of the Respondent to Avail Cenvat Credit on Capital Goods:
The Tribunal emphasized that the respondent had not engaged in any manufacturing activity using the capital goods. Instead, the respondent had leased the premises and machinery to another company and had become a service provider. Consequently, the Tribunal ruled that the respondent was entitled to avail Cenvat Credit on the capital goods as they were used for providing taxable output services. The Tribunal dismissed the appellant's reliance on the Surya Roshni case, noting that the facts differed significantly, as the respondent had not manufactured any exempted goods.

Conclusion:
The Tribunal concluded that no substantial question of law arose in this case. It affirmed that the respondent was entitled to Cenvat Credit on capital goods since they were used for providing taxable services and not for manufacturing exempted goods. The appeal was dismissed, and all pending miscellaneous applications were disposed of.

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