2018 (9) TMI 739 – CESTAT HYDERABAD – TMI – CENVAT credit – input service – renting of immovable property service (renting of godowns) – place of removal – denial of credit on the ground that these godown are beyond the place of removal – Held that:- These godowns are places of removal in terms of Sec. 4(3)(c) of the Central Excise Act. Nevertheless, the nexus with manufacture is also decided in identical cases in the case of DSCL Sugar [2012 (12) TMI 830 – CESTAT NEW DELHI] where it has been held that sugar factories are entitled to input service credit on rent paid on godowns in which they stored sugar after paying duty – appeal allowed – decided in favor of appellant. – Appeal Nos: E/31186/2017 & E/30055/2018 – A/31068-31069/2018 – Dated:- 28-8-2018 – Mr. P. Venkata Subba Rao, Member (Technical) Shri G. Prahlad, Advocate for the Appellant. Shri Bhanu Kiran, Asst. Commissioner/AR for the Respondent. ORDER [Order per: P.V. Subba Rao.] 1. These two appeals involve a similar issue and
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are filed by the appellant. The short point in question is whether the appellant is eligible for CENVAT credit on the input service on renting of immovable property for their godowns in which they have stored duty paid sugar which they sold subsequently. As per Rule 2(l) of CENVAT Credit Rules, 2004, input service means any service used by a provider of taxable services for providing the output service or to use by a manufacturer whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products up to the place of removal . It is to be decided whether the godowns in question are to be treated as places after the point of removal or they are the places of removal. According to the show cause notice the godowns are not part of the place of removal and the removal had already taken place as the duty has been paid before the goods were stored in these godowns. The original authority held that the use of input service must be integrally con
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yment of duty; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory; 3. It is his argument that a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory are also covered in the definition of place of removal. In this case, they have paid duty and cleared the sugar from their factory and stored it in the depots from where the sugar was subsequently sold to the customers. Therefore, the godowns of their factory consequently fall under the definition of place of removal and hence, they are entitled to the credit of CENVAT credit on the service tax paid from renting of immovable property on these godowns. He relied on the following orders: 1) DSCL Sugar Vs CCE, Lucknow [ 2014-34-STR-58-Tri.-Delhi] in which it was held that the godowns of the appellant at Agra and Farrukhabad where th
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ts factory on payment of duty cannot be treated as input service under Rule 2(l) and therefore no credit on service tax can be given on the same. 5. I have considered both arguments. The show cause notice only sought to deny credit on the ground that the godowns are not places of removal not on the ground of lack of nexus with manufacture based on which the demand was confirmed. I find these godowns are places of removal in terms of Sec. 4(3)(c) of the Central Excise Act. Nevertheless, the nexus with manufacture is also decided in identical cases in the case of DSCL Sugar (supra) and Thiru Arooran Sugar Ltd (supra) and it has been held that sugar factories are entitled to input service credit on rent paid on godowns in which they stored sugar after paying duty. Respectfully, I follow the ratio of these decisions. I, therefore, find the impugned orders needs to be set aside and I do so. 6. The appeals are allowed. (Pronounced in the open court on 28.08.2018) – Case laws – Decisions –
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