2011 (10) TMI 691 - AT - Service Tax

Summary

Issues:
1. Interpretation of liability under statutory enactment in relation to manufacture for Cenvat credit eligibility.
2. Jurisdiction to entertain appeal based on pecuniary limits under the Finance Act, 1994.

Analysis:

Issue 1: Interpretation of liability under statutory enactment for Cenvat credit eligibility

The judgment deliberated on the interpretation of liability under a statutory enactment in relation to manufacture for the eligibility of Cenvat credit. The counsel argued that if the liability relates to ancillary incidental activity contributing to the main activity of manufacture, it should be considered for Cenvat credit. The audit finding acknowledged the liability related to insurance under a statutory enactment. It was concluded that discharging such liability by paying Service Tax entitles the appellant to Cenvat credit. The opposing argument by the Departmental Representative (DR) was countered, emphasizing the entitlement to waive pre-deposit and allow the appeal.

Issue 2: Jurisdiction to entertain appeal based on pecuniary limits under the Finance Act, 1994

The judgment addressed the issue of jurisdiction to entertain the appeal based on pecuniary limits set by the Finance Act, 1994. Although the amount involved was Rs. 23,258 with a penalty of Rs. 2,000, initially, the appeal was considered for dismissal on pecuniary jurisdiction grounds. However, upon reviewing the matter in controversy, it was deemed important to intervene due to the significance of the issue. The judgment highlighted that the Finance Act, 1994 does not permit dismissal solely based on monetary limits in the absence of a provision similar to the second proviso to Section 35B of the Central Excise Act, 1944. As a result, the appeal was deemed entertainable, and the requirement of pre-deposit was waived with the consent of both parties for the appeal's disposal.

In conclusion, the judgment allowed the appeal, setting aside the impugned order after considering the interpretation of liability under a statutory enactment for Cenvat credit eligibility and addressing the jurisdictional aspect based on pecuniary limits under the Finance Act, 1994.