2011 (4) TMI 679 - AT - Service Tax

Waiver of pre-deposit - Cenvat creedit on inputs - transport charges incurred for bringing back empty trolleys used for movement of final products, namely, auto parts and tractor parts - In the case of Kerala Minerals and Metals Ltd. Vs Commissioner of Central Excise, Thiruvananthapuram 2009 -TMI - 77195 - CESTAT, BANGALORE , the Tribunal has held that containers and empty cylinders being used for packing the final products are to be treated as inputs used by manufacturers in or in relation to the manufacture of final products and credit of service tax is admissible - Therefore, the assessees have made out a prima facie case for unconditional waiver.

Summary

Issues: Application for waiver of pre-deposit of CENVAT credit alleged to be wrongly availed on transport charges for empty trolleys used for movement of final products.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Chennai, addressed the issue of waiver of pre-deposit of Rs.2,49,795 representing CENVAT credit allegedly wrongly availed on transport charges for empty trolleys used for moving final products. The Commissioner (Appeals) had relied on the decision in Maruti Suzuki Ltd. Vs. Commissioner of Central Excise, Delhi-III, stating that trolleys are not used in the course of manufacturing final products, thus denying manufacturers the entitlement to credit. However, the presiding judge noted that the Maruti Suzuki decision was under reconsideration by a larger Bench of the apex court. In contrast, in the cases of Commissioner of Central Excise, Jaipur-II Vs Nitin Spinners Ltd. and Kerala Minerals and Metals Ltd. Vs Commissioner of Central Excise, Thiruvananthapuram, the Tribunal had ruled that containers and empty cylinders used for packing final products are considered inputs used in or in relation to manufacturing final products, making the credit of service tax admissible.

The judge found that the assessees had established a prima facie case for unconditional waiver based on the precedents mentioned. Consequently, the judge dispensed with the pre-deposit of the amounts in question, including duty and penalty, and stayed the recovery pending the appeal. The decision was dictated and pronounced in open court, providing clarity on the application for waiver of pre-deposit regarding the CENVAT credit issue related to transport charges for empty trolleys used in the movement of final products.