By TIOL News Service

MUMBAI, JULY 20, 2017: THIS is a Revenue appeal.

The respondent entered into a rent agreement for use of the road owned by M/s. Ispat Industries Ltd. As per the agreement, the respondents are paying the rent along with service tax to the lessor i.e. M/s. Ispat Industries Ltd.

In respect of the service tax paid by M/s. Ispat Industries Ltd. , the respondent availed CENVATcredit.

The original authority has disallowed the credit on the ground that the road is located outside the factory of the respondent and it is not used in or in relation to the manufacture of final product.

The Commissioner (Appeals) set aside this order and, therefore, Revenue is before the CESTAT.

The AR submitted that the stand taken by the original authority is correct and hence needs to be restored.

Case laws relied upon are –

(i) Rajhans Metals (P) Ltd. - 2007-TIOL-1491-CESTAT-AHM

(ii) Asian Tubes Ltd. - 2010-TIOL-1840-CESTAT-AHM

(iii) Ellora Times Ltd. - 2008-TIOL-2342-CESTAT-AHM

(iv) Manikgarh Cement - 2010-TIOL-720-HC-MUM-ST

(v) Stanadyne Amalgamations Pvt. Ltd. - 2011-TIOL-881-CESTAT-MAD

The respondent assessee submitted that as regards‘input service' there is no criteria that it should be used in the factory of the manufacturer; that the road is used for transporting the goods meant for the production in the factory of the appellant, therefore, it is directly used in or in relation to the manufacture of final product and the credit is admissible.

Supported judgments are –

(i) Ultratech Cement Ltd. - 2010-TIOL-745-HC-MUM-ST

(ii) Deepak Fertilizers & Petrochemicals Corpn. Ltd. - 2013-TIOL-212-HC-MUM-CX

(iii) Oil & Natural Gas Corpn. Ltd. - 2013-TIOL-202-HC-MUM-ST

(iv) Orient Paper Mills - 2016-TIOL-1985-CESTAT-DEL

(v) Endurance Technologies P. Ltd. - 2011-TIOL-1045-CESTAT-MUM

(vi) StanzenToyotetsu India (P) Ltd. - 2011-TIOL-866-HC-KAR-ST

(vii) Coca Cola India Pvt. Ltd. - 2009-TIOL-449-HC-MUM-ST

(viii) WelspunMaxsteel Ltd. - 2012-TIOL-1662-CESTAT-MUM

(ix) Rajasthan State Chemical Works - 2002-TIOL-66-SC-CX

After considering the submissions made by both sides, the Bench observed thus –

"4. …I find that even though the road is located outside the factory premises but the service of renting of immoveable property is received and used by the respondent. The road is used for transportation of goods which is directly related to the manufacture of final product in their factory. As regard the input service, even though it is used outside the factory, but if it is used in or in relation to the manufacture of final product and overall business activity, the credit is in respect of such service is admissible in terms of Rule 2(l) of Cenvat Credit Rules, 2004. On going through the judgment cited by the rivals, I conclude that the service of renting of road to the respondent is an input service and the credit is admissible…"

The impugned order was upheld and the Revenue appeals were dismissed.

(See 2017-TIOL-2499-CESTAT-MUM)