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2011 (4) TMI 474 - AT - Service TaxWaiver of pre-deposit - Documents for availment of Cenvat credit - CENVAT credit avail by the units on the basis of entry in the computer rather than the receipt of the invoices - Held that - in the absence of any allegation on non-availability of CENVAT credit, the only omission seems to be availment of credit earlier than the date on which the unit becomes eligible - Therefore, at best, interest can be demanded and in any case no penalty has been imposed - Accordingly, pre-deposit is waived and stay against recovery of the CENVAT credit demanded with interest is allowed during the pendency of the appeal.
Issues: Disallowance of CENVAT credit due to early availment based on computer entry rather than physical receipt of invoices.
Issue Analysis: 1. The appellants distributed input service tax credit among various factories using ISD challans under Rule 7 of the CENVAT Credit Rules, 2004. Discrepancies were found in the timing of credit availment compared to the physical receipt of invoices, leading to the disallowance of CENVAT credit amounting to Rs.76,60,985. 2. The appellants argued that although there was a time lag in physically receiving the invoices, the credits were availed on the same day due to the SAP system automatically processing entries upon issuance of challans by the corporate office. The counsel contended that disallowing the total credit was unjust as the service tax had been paid and distributed correctly, with the only issue being the timing of credit availment. 3. The Tribunal noted that the case involved early availment of CENVAT credit based on computer entries rather than invoice receipts. Acknowledging that there was no dispute regarding the availability of CENVAT credit, the Tribunal considered the omission to be the early availment of credit before the unit became eligible. As no penalty was imposed and interest could be demanded, the Tribunal waived the pre-deposit requirement and granted a stay against the recovery of the disallowed CENVAT credit with interest during the appeal process.
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