The Customs, Excises, and Service Taxes Appellate Tribunal (CESTAT), Delhi Bench ruled that the Cenvat Credit is admissible for input service used in storage facilities for inputs outside the premises in relation to the manufacture of goods.
The Department observed that the appellant, M/s. Balkrishna Industries Ltd. have wrongly filed Cenvat Credit of input services on ineligible services as that of renting premises for business purposes.
It was observed that the appellant has utilised Cenvat Credit of service tax on the basis of invoices issued by M/s. Grover Stainless Pvt. Ltd., Delhi for the services not availed exclusively by the appellants as the premises were taken on rent for being used as godown not only of the appellant but of all subsidiaries and associated companies of the appellant‟s group.
The service provider leased the premises to M/s. Balkrishna Industries Ltd. through its Vice President to utilise the premises for business purpose only but by all the subsidiaries and associated companies of the appellant.
Accordingly, vide Show Cause Notice it was alleged that the services in question do not fall within the purview of definition of input services and, therefore, the Cenvat Credit of Service Tax taken on the basis of the aforesaid invoices was proposed to be denied as being not admissible.
Accordingly, an amount of Rs.17,02,715/- was proposed to be recovered from the appellants alongwith the interest and the proportionate penalties. The said proposal was confirmed initially. The appeal thereof was dismissed.
The appellants urged that it has imported various non-excisable inputs that were required for the manufacture of tyres. However, the storage space being insufficient in the appellant’s premises, the appellant required an additional godown for storage of its non-excisable inputs and accordingly entered into a lease agreement with M/s. Grover Stainless Pvt. Ltd. (GSPL) for leasing its premises.
It has been impressed upon that premises have been used by the appellant exclusively for storing its non-excisable inputs and the rent has been paid by the appellant to GSPL along with applicable service tax on a monthly basis against the invoices raised by them. Due to this reason, the appellant availed Cenvat Credit of the Service Tax paid on such monthly invoices raised by GSP 19 copies of invoices as being attached with the appeal record have been impressed upon.
The coram of a Judicial Member, Rachna Gupta noted that while deciding in favor of the assessee held that Rule 8 has wrongly been invoked by the Department while denying the admissibility of Cenvat Credit to the appellants for his raw-material to have been stored in the impugned leased premises taken on lease by the appellant exclusively from M/s. GSPL and being in use by the appellant exclusively.