2013 (12) TMI 1469 - AT - Central Excise

Waiver of pre deposit - Denial of CENVAT Credit - event management service - Held that - While there is no dispute that the function had been organized at a temple and the finding of the Commissioner (Appeals) in the impugned order is that the function might have been attended by the dealers and retailers in which the CMD and higher officers might have been interacted with them the Cenvat credit is sought to be denied only on the ground that it is a religious function because the function has been organized in the temple. I am of the prima facie view that ground for denying Cenvat credit is not correct as just because the function was organized at the temple it would not become a religious function when there is no evidence that it was only for their employees and no dealers or retailers had been invited. - Stay granted.

Summary

Issues:
Denial of Cenvat credit for event management service used in organizing a function at a temple on the grounds of lack of nexus with manufacturing and being considered a religious function instead of a sales promotion activity.

Analysis:
The appellant, a manufacturer of cement and clinker, organized a function at a temple within their factory premises, involving company officials, dealers, and retailers, with the help of event management services. The appellant claimed Cenvat credit for the Service Tax paid on the event management service. However, the department contended that the function at the temple was not related to sales promotion or manufacturing activities, issuing a show cause notice for denial of the Cenvat credit, recovery, interest, and penalty. The Dy. Commissioner confirmed the demand in the Order-in-Original, which was upheld by the Commissioner (Appeals), stating that organizing a function at a temple does not qualify as a sales promotion activity. The appellant appealed this decision, seeking a waiver of pre-deposit for hearing the appeal and a stay on recovery.

The appellant argued that since dealers and retailers attended the function and interacted with management, it was meant for promoting sales, contrary to the Commissioner (Appeals) finding that a temple function is inherently religious. The departmental representative raised a preliminary objection regarding the lack of supplied documents and evidence to prove the function was not religious. The appellant's counsel emphasized the presence of dealers and retailers as evidence of the function's sales promotion intent.

The Tribunal considered both sides' submissions and found that the denial of Cenvat credit based solely on the function being held at a temple was incorrect. Despite the religious setting, the presence of dealers and retailers indicated a business-related purpose, supporting the appellant's claim for Cenvat credit. Therefore, the Tribunal ruled in favor of the appellant, waiving the pre-deposit requirement for the Cenvat credit demand, interest, and penalty, and stayed the recovery until the appeal's disposal. The stay application was allowed, granting relief to the appellant.