CENVAT CREDIT

[S.C. WADHWA]

A company has a premises (showroom) on rent in which it sells excisable goods manufactured in another
premises(factory). The goods are cleared from the factory after payment of excise duty.
The company pays service tax on rent in repect of aforesaid showroom.
Now the question is whether such company can avail cenvat credit of such service tax paid
against excise duty payable on goods manufactured.

[YAGAY and SUN]

if you are paying excise duty on the goods which are being removed from showroom, then, you can avail the CENVAT credit on the renting of immovable property.  As per the definition of Input service credit can be taken upto the place of removal.

Further, if the sale through showroom is treated as trading of goods then you can avail the CENVAT credit since trading is an exempted service.

[JAMES PG]

if it is treated as trading of goods, credit cannot be availed. If credit is availed, Rule 6(3) will come into play

[Vijay kumar]

In terms of Rule 2(l) of CCR, 2004 credit of input service can be availed on the services used for manufacture of excisable goods and their clearance upto the place of removal. Service tax on the renting of shop is neither an input service used for manufacture of goods nor the shop is a place of removal. There is no nexus between the rental service on show room and the manufacture/clearance of the goods upto the place of removal.  If the shop were to be a depot, credit would be eligible. Accordingly, it is felt that credit is not eligible in the case specified by you.

[NK SHETE]

As per the query, duty paid goods are received in the show room which is beyond the place of removal hence cenvat credit of service tax on renting may not be eligibel, in my opinion.

AI Summary

Cenvat credit on renting services depends on nexus to manufacture and clearance up to the place of removal.
Cenvat credit of service tax on renting a showroom is claimable only where the rental service qualifies as an input service used in manufacture or in clearance up to the place of removal; if the showroom is beyond the place of removal and not a depot, no nexus exists and credit is not eligible, while factual characterisation (including whether sales are treated as trading or a depot) determines entitlement.