2010 (9) TMI 804 - AT - Service Tax

Input services - Pre-deposit and stay of recovery in respect of duty - Cenvat credit - services availed by the appellant are in relation to storage of raw materials/finished goods certification of quality of goods and processes communication with Government or other agencies in connection with the business of the company including manufacture and clearance of the finished goods and hence would fall within the ambit of the definition of input service . The services mentioned above apparently fall under one or the other of these categories. application allowed and accordingly there will be waiver of pre-deposit and stay recovery in respect of the amounts of duty

Summary

Issues:
- Denial of CENVAT credit on certain taxable services
- Appellant seeking waiver of pre-deposit and stay of recovery
- Disallowance of CENVAT credit on specific services
- Prima facie nexus between services and storage of goods
- Opposing views on substantiation of claims for waiver and stay

Analysis:
The judgment revolves around the denial of CENVAT credit on taxable services, with the appellant requesting a waiver of pre-deposit and stay of recovery concerning a duty amount demanded by lower authorities. The lower authorities disallowed CENVAT credit on 15 services, leading to a challenge against the denial of benefit for certain enumerated services. The appellant argued that these services qualify as input services under Rule 2(l) of the CENVAT Credit Rules, making them eligible for CENVAT credit. The appellate authority had already granted benefits for some services, and the current challenge focused on the remaining services.

The appellant's counsel highlighted the nature of the services and their relevance to storage of raw materials or finished goods in godowns away from the factory. The Tribunal acknowledged a prima facie nexus between these services and goods storage, meeting the essential criteria of an input service classification. Additionally, the counsel attempted to establish connections between other services and machinery in godowns or the quality of goods and processes, which the Tribunal found valid.

The Tribunal considered opposing arguments from the SDR, who relied on case law and lower authorities' findings to contest the appellant's claims. The SDR emphasized the need for substantiated claims to support the application for waiver and stay. Despite this, the Tribunal took a broad view, noting that the services availed by the appellant were related to various business activities, including storage, quality certification, and communication with governmental agencies. These activities fell within the definition of 'input service' under the CENVAT Credit Rules.

Consequently, the Tribunal found a prima facie case in favor of the appellant, granting the application for waiver and stay of recovery. The decision allowed for the waiver of pre-deposit and stay of recovery concerning the duty amounts in question, pending further examination at the final hearing stage.