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Issues involved: Eligibility of Cenvat credit of Service Tax paid on commercial or industrial construction service.
Summary: The appeal and stay application were directed against the Order-in-Original u/s 30/ST-II/WLH/2012 passed by the Commissioner of Service Tax, Mumbai-II. The issue involved the eligibility of Cenvat credit of Service Tax paid on construction services. The appellant, M/s. Nirlon Limited, rented out the completed construction and paid Service Tax under 'Renting of Immovable Property' category. The credit was denied based on the clarification in Circular No. 97/8/2007-S.T., stating that the output was an immovable property, not goods or service, resulting in demands, interest, and penalties totaling approximately &8377;5.39 crores. The appellant cited a Tribunal case where Cenvat credit was allowed for inputs used in storage tanks, arguing that the inputs were essential for providing storage and warehouse services. The High Court upheld this decision, emphasizing the necessity of inputs for the output service. Another Tribunal case supported the eligibility of Service Tax paid on construction services for renting immovable property services under Rule 2(l) of the Cenvat Credit Rules, 2004. The Revenue reiterated the lower authority's findings and the circular instructions, mentioning the challenge to the High Court decision in the Apex Court without obtaining a stay. After considering the arguments and relevant precedents, the Tribunal found that the appellant established a prima facie case for unconditional waiver of pre-deposit of dues. Consequently, the Tribunal granted unconditional waiver and stayed the recovery of dues during the appeal process.
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