In a major relief to Honda Motorcycle & Scooter, the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Delhi bench has held that cenvat credit is allowable on service tax paid on rent of Infrastructural facilities.
Before the authorities, the assessee contended that the common infrastructural facilities are vital for undertaking manufacturing activity and without such infrastructural facilities, such as, road, supply of water, boundary wall for safety of the premises the appellant cannot undertake the manufacturing activity and therefore they are very much entitled to the Cenvat credit of service tax paid by them on the component of the rent paid by them for availing such infrastructural facilities.
Allowing relief to the assessee, the Tribunal observed that the common facilities such as road, water supply facility, boundary wall infrastructure for supply of electricity etc. are absolutely essential for making the manufacturing facility to work.
“For example without ‘road’ inside their factory premises, it is absolutely unthinkable to as to how the raw material, manpower, and finished goods are going to have movement. We also feel that common facilities availed by the appellant on rent basis are in “relation to the manufacture of goods” and then on an integral part of the overall activity of manufacturing. We also feel that since the charges of rent/license fee paid by the appellant must have been included in the cost of the finished product manufactured by the appellant as per the provisions of Cenvat Credit Rules they are entitled to credit of service tax paid by them as the facilities were in relation to manufacturing of their finished product,” the Tribunal said.To Read the full text of the Order CLICK HERE