Huhtamaki Ppl Ltd Vs C.C.E. & S.T. (CESTAT Ahmedabad)
There is no dispute that the appellant have outsourced the warehousing and storage of their input in the rented warehouse and godown. It is also not in dispute that the said warehouse / godown was used for storage of inputs which are meant for use in the manufacture of final product. Both the lower authorities have denied the credit on the renting of immovable property service on the ground that the warehouse is located outside the premises of the factory. The appellant have not obtained permission under Rule 8 of Cevat Credit Rules, 2004 for storage of inputs outside the factory and the input service in question has no nexus with manufacture of final product, hence, does not qualify as input service defined under Rule 2 (l) of the Cenvat Credit Rules, 2004. On going through the Show cause notice, I find that the only allegation in the Show cause notices that since, the renting of immovable property service is not included in the definition of input service. Accordingly, the said service used by the appellant neither falls under scope definition of input service nor has nexus with manufacturing activity. However, in the adjudication order and order of Commissioner (Appeals) both the authorities have travelled beyond the scope of show cause notice. In as much as the Cenvat credit was denied on the ground that the godown / warehouse where the input is stored is outside the factory premises and the appellant have not obtained the permission under Rule 8 of Cenvat Credit Rules, 2004. Since, the above reasoning is not flowing from the show cause notice even without going into the legality of the above two issues, the orders of the both the authorities does not sustain, for the reason that any issue which were not raised in the show cause notice, cannot be imported into the adjudication order or Commissioner (Appeals) order.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the appellant are engaged in the manufacture of excisable goods falling under chapter 39,47,48 and 76 of the Central Excise Tariff Act, 1985 and for the said purpose has a factory located in Silvassa, Daman. Due to short of storage space within the factory premises, the appellant outsourced storage facility from Akash Warehousing Corporation, Bhiwandi and Pioneer Logistics Kilwani which are outside the factory on rental basis for storing the imported inputs before bringing the same factory for further processing and manufacture of final product. The appellant in respect of Service Tax paid on warehousing service availed the cenvat credit and same was informed vide two letters dated 16.02.2010 and 10.02.2011 to the Learned Jurisdictional superintendent of Central Excise and the Learned Jurisdictional Deputy Commissioner of Central Excise about the availment of Cenvat Credit of the Service Tax paid on the storage/ warehouse services availed for storing the imported inputs. In the said letter it was also stated that Rule 8 of the Cenvat Cerdit Rules, 2004 is not applicable in their case. The said letters are annexed with the appeal paper. An EA-2000 audit was conducted on the Appellant’s record and it was observed that the appellant has wrongly availed the credit of Service Tax in respect of the rent paid for warehouse / godown used for storing the imported inputs since the warehouse / godown had separated from Central Excise registration and were not registered as a first stage /second stage dealer by the appellant for storage of its goods, out of the total Cenvat Credit on storage and warehousing services which pursuant to the audit report, the appellant deposited Rs.3,27,392/- along with the interest of Rs. 24,227/- pertaining to the services received from Pioneer Logistics Kilwani, prior to the issuance of the show cause notice. Subsequently, the appellant were issued a show cause notice dated 26.08.2015 proposing to demand and recover the ineligible Cenvat Credit of Service Tax paid on the renting of warehouse / godown along with applicable interest and penalty. The said show cause notice was adjudicated vide Order-In-Original dated 29.12.2015 wherein the Learned adjudicating authority confirmed the entire demand of ineligible Cenvat Credit of Rs. 2,29,992/- and appropriated amount of Rs. 3,27,392/- paid by the appellant along with interest under Rule 14 of the Cenvat Credit Rules read with Section 11A (4) of the Central Excise Act, 1944 and imposed equivalent penalty of Rs. 5,57,384/- under Rule 15 (2) of the Cenvat Credit Rules read with Section 11AC (1)(c) of the Central Excise Act, 1944. The appellant filed an appeal before the Learned Commissioner (Appeals) who vide his Order-In-Appeal dated 25.06.2018 dismissed the appeal. Therefore, the present appeal filed by the appellant.
2. Shri. Mihir Mehta Learned Counsel along with Shri. Mohit Raval advocate appeared on behalf of the appellant. Shri Mihir Mehta submits that as per the adjudication order as well as Commissioner (Appeals) order the Cenvat Credit was denied in respect of warehousing and storage on the ground that this service has no nexus with the manufacture of final product for the reason that the said warehouse/ godown are located out of the premises of the appellants factory. In respect of such warehouses permission under Rule 8 of the Cenvat Credit Rules was not obtained. He submits that the input which is stored in the warehouse / godown is directly meant for use in the manufacture of final product, therefore the service for warehousing and storage used for such input has direct nexus with the manufacture of final product. He further submits that it is a settled law that location of service received is not material as irrespective of location of receipt of service it should have nexus with the manufacture and in the business activity of the assessee. Therefore, even though the warehouse and godown are located outside the factory premises but the same are admittedly used for storage of inputs which is used for manufacture of final product. The said services are clearly covered under the definition of input service. In support of this submission, he placed reliance on the following judgments:-
