FLEX INDUSTRIES LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE facts leading to filing of this appeal, in brief, are as under: -

(2.) SHRI K.K. Anand, Advocate, ld. Counsel for the appellant, pleaded that the appellant on account of excess capacity had leased out their factory premises at Malanpur to M/s. Montage Enterprises Pvt. Ltd.; that this transaction of the appellant with M/s. Montage Pvt. Ltd. is not covered by the definition of "Banking and Financial Service", as given in Section 65(105)(zm) read with Section 65(12) as what is covered by the definition of "Banking and Financial Service" under Section 65(12), is financial leasing service including equipment leasing, hire purchase by a body corporate, wherein an element of financing is involved, while the agreement of the appellant with M/s. Montage Enterprises Pvt. Ltd. is purely an agreement for leasing of the premises on rent basis and there is no element of finance involved in it, and that activity of the appellant is, in fact, renting of immovable property which became taxable w.e.f. 1 -6 -2007 under Section 65(zm) and hence, during the period prior to 1 -6 -2007, the same would not be taxable. He also cited the judgment of the Tribunal in the case of Banswara Syntex v. CCE, Jaipur reported in : 2010 (18) S.T.R. 68 (Tribunal) wherein it was held that leasing of land, building and plant and machinery under a lease agreement is not financial leasing and is not taxable under Section 65(105)(zm) read with Section 65(12) as "Banking and Financial Service". He also cited the judgment of the Tribunal in the case of CCE, Vadodara -I v. G.E. India Industries Pvt. Ltd. reported in : 2008 (12) S.T.R. 609 (Tribunal -Ahmd.), wherein it was held that though during the period prior to 1 -6 -2007, there was no definition of "financial lease" in Section 65(12), it has to be interpreted in the sense in which it is understood in the common parlance or trade parlance and that lease agreements, which, do not satisfy the criteria for financial leasing in Accounting Standards published by ICAI for financial leases, cannot be treated as financial lease agreements. Shri Anand emphasized that lease agreement, in question, is not a financial lease agreement as there is no option to the lessee to acquire the asset at the end of the lease period. He, therefore, pleaded that the impugned order is not correct.

(3.) WE have considered the submissions from both the sides and perused the records.