Vasu Logistics Limited Vs Commissioner of Central Excise & CGST (CESTAT Delhi)
CESTAT Delhi allowed the appeal filed by Vasu Logistics Limited against denial of CENVAT credit on rented residential premises provided to employees/staff recruited from outside the city. The appellant, a supplier of clearing and forwarding agency and transportation of goods services, had taken houses on rent as residences for employees who were working from home. The Revenue issued a show cause notice dated 03.09.2019 for April 2016 to June 2017, proposing denial of credit on renting of property service.
The demand was adjudicated with interest and penalty. The appellant submitted that the premises were provided to employees hired for official purposes and working from home, making the service eligible for credit. The departmental representative relied on the exclusion clause in Rule 2(l) of the CENVAT Credit Rules, 2004 concerning residential premises used personally by employees, citing C.E. Nagpur vs. Manikhgarh Cement and Commissioner of Central Excise vs. Gujarat Heavy Chemical Limited.
CESTAT observed that the cited decisions required a nexus between availment and usage of the service. It found that the premises were used for employees working from home and had been taken by the appellant for business purposes. The proceedings were therefore held unsustainable. The demand for denial of CENVAT credit was set aside, consequently no penalty was recognizable, and the appeal was allowed.
