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Issues:
- Demand of Service Tax and education cess - Disallowance of Cenvat credit and education cess - Imposition of mandatory penalty - Penalty under Section 76 of the Act Analysis: Demand of Service Tax and education cess: The appellants were required to pre-deposit the demand of Service Tax amounting to Rs. 1,01,429/- along with education cess of Rs. 3,161/-. The issue revolved around whether the service provided by the appellants, related to storage and warehousing, was taxable under the Finance Act, 1994. The department contested that the duty paid on certain items, for constructing storage facilities, was not eligible for credit. However, the learned Advocate argued that the duty paid items were essential for the storage tank fabrication, crucial for the service. The Commissioner (Appeals) upheld the original order, leading to penalties being imposed. The Tribunal found merit in the appellant's case, granting a waiver on the pre-deposit until the appeal's final decision, citing strong merits and a plea of time-bar. Disallowance of Cenvat credit and education cess: Apart from the Service Tax demand, the appellants were also facing disallowance of Cenvat credit amounting to Rs. 6,31,416/- along with education cess of Rs. 12,638/-. The dispute centered around the eligibility of duty paid items as capital goods or inputs for the appellants' service operations. The Advocate argued for the credit's validity, emphasizing the necessity of the items for the storage and warehousing service. The Tribunal, after careful consideration, acknowledged the appellant's strong case on merits and granted a full waiver on the pre-deposit, ensuring no recovery proceedings until the appeal's final decision. Imposition of mandatory penalty and Section 76 penalty: In addition to the tax demands and credit disallowance, the appellants were also facing penalties. A mandatory penalty of Rs. 1,04,590/- was imposed along with a penalty of Rs. 100/- per day under Section 76 of the Act. The Tribunal, after hearing both sides, decided to order a full waiver on the pre-deposit of the penalty amounts until the appeal's final resolution. This decision was based on the perceived strong merits of the appellant's case and the plea of time-bar presented by the Advocate. In conclusion, the Tribunal's judgment in this case focused on granting a waiver on the pre-deposit amounts related to Service Tax demand, Cenvat credit disallowance, and penalties, considering the strong merits of the appellant's case and the plea of time-bar, ensuring no recovery proceedings until the appeal's final decision.
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