2014 (6) TMI 960 - AT - Service Tax

Waiver of pre-deposit - Demand of service tax alongwith interest and penalties - Ineligible Cenvat credit - Cenvat credit availed of service tax paid by the service providers in respect of the effluent/waste management in the factory premises - Held that - the definition of the input service as enshrined in Rule 2(l) of the Cenvat Credit Rules, 2004 clearly envisages the eligibility to avail Cenvat credit of the service tax paid, inasmuch as unless the effluent treatment plant is in place, the manufacturing activity cannot commence is the law of the land today as regards the pollution control norms being implemented by the State Government. Therefore, the appellant is eligible to avail the Cenvat credit on service tax paid on such services rendered to them. - Waiver granted and recovery stayed

Summary

Issues: Stay petitions for waiver of pre-deposit of demands confirmed as ineligible Cenvat credit, interest, and penalties.

In this judgment by the Appellate Tribunal CESTAT AHMEDABAD, the issues revolved around stay petitions filed for the waiver of pre-deposit of demands confirmed as ineligible Cenvat credit, interest, and penalties. The adjudicating authority had confirmed the demand, stating that the appellant had availed Cenvat credit of service tax paid by service providers for effluent/waste management in their factory premises. Upon hearing both sides and examining the records, the Tribunal found that the service tax was paid by the service provider for effluent treatment services provided to the assessee. The Tribunal referred to Rule 2(l) of the Cenvat Credit Rules, 2004, which defines input service and allows availing Cenvat credit of service tax paid. The Tribunal noted that the manufacturing activity cannot commence without the effluent treatment plant, aligning with pollution control norms. Consequently, the Tribunal was convinced of the appellant's eligibility to avail Cenvat credit on service tax paid for such services. As a result, the Tribunal allowed the applications for waiver of pre-deposit amounts and stayed the recovery until the appeals were disposed of.

This judgment highlights the importance of understanding the eligibility criteria for Cenvat credit under the relevant rules and regulations. It emphasizes the necessity of compliance with pollution control norms and the role of effluent treatment services in manufacturing activities. The Tribunal's decision to allow the waiver of pre-deposit and stay recovery pending appeal demonstrates a balanced approach to addressing the issues raised in the stay petitions. The judgment serves as a precedent for similar cases involving the availment of Cenvat credit on service tax paid for essential services related to manufacturing processes.