Cenvat Credit cannot be Denied Merely because Godown was Situated Outside Factory Premises: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench ruled that cenvat credit cannot be denied merely because godown was situated outside factory premises.

On the issue relating to credit on renting of godown, the counsel for the appellant submitted that the appellant had correctly availed the credit of service tax on renting of godown situated outside the factory premises and construction and repair of shed of warehouse within the factory.

As regard the issue that whether the Cenvat Credit is admissible on the input service received outside the factory various judgments were passed. In the case of Jubilant Life Sciences, it was held that even though the input service received and consumed by the assessee’s research and development center though situated out of the factory premises and providing scientific and Technical Consultancy Services to their own units for manufacturing drug was held eligible to Cenvat Credit.

In case of Triveni Engineering & Industries Ltd, the Security Service utilized for safe keeping of sugar cane purchased at cane collection centre which is outside the factory of the assessee’s sugar manufacturing unit, the Tribunal in this fact allowed the Cenvat Credit on the ground that even though the service was used outside the factory but it is used in relation to procurement of inputs and fall within including part of definition of input service.

A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “As regard the issue of cenvat credit of service tax paid on renting of godown situated outside the factory premises for an amount of Rs. 36,191/- we are of the view that merely because the godown was situated outside the factory premises, cenvat cannot be denied for the reason that the said godown was used for storage of the goods which was used in the manufacture, therefore, in our view the credit is admissible.”

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