2011 (5) TMI 551 - AT - Service Tax

Waiver of predeposit - part of the demand is under the head Business Auxiliary Service and the rest under the head Travel Agents Service - Revenue submits that any nexus is yet to be established between the air travel by the employees of the company and the manufacture / clearance of their final products - In respect of auction of scrap also, the appellant has failed to make out a coherent case against the proposal to recover CENVAT Credit - Held that - The employees of the company are said to have undertaken air travel for the business purposes of the company - appellant has referred to a statement of relevant particulars of air travel - This statement contains particulars like bill number and date, air travel agent s name, amount of service tax and education cess etc - No copy of any bill nor any other document has been produced to disclose the purpose of travel - Some documents relating to auction of scrap are seen on record - Some of these documents provide the description of the goods as Imported scrap and other documents described the goods as Brass scrap - It is difficult to hold that all these documents coherently support the claim of the appellant that the scrap generated from the process of manufacture of final products in their factory was disposed of by availing the service of auctioning - The documentary evidence adduced by the appellant is far from convincing - Decided against the assessee.

Summary

Issues:
1. Waiver of predeposit and stay of recovery sought by the appellant in relation to service tax demand.
2. Classification of service tax demand under 'Business Auxiliary Service' and 'Travel Agents Service'.
3. Establishing nexus between air travel service and manufacture/clearance of final products.
4. Establishing nexus between auctioning service and manufacture of final products.

Analysis:
1. The appellant filed an application seeking waiver of predeposit and stay of recovery for a service tax demand of Rs.49,549/- and an equal amount of penalty covering the period from May 2007 to November 2008. The demand was categorized under 'Business Auxiliary Service' and 'Travel Agents Service'. The appellant claimed entitlement to CENVAT Credit for service tax paid on air travel agent services used for business-related air travel by company employees and for services received from an auctioning agent for disposing of scrap arising from the manufacture of final products.

2. The appellant's counsel argued that the air travel agent's service and the auctioning service qualified as 'Input services'. However, the Departmental Representative contended that the nexus between air travel by company employees and the manufacture/clearance of final products was not established. Similarly, the coherence of the appellant's case regarding the auction of scrap in relation to CENVAT Credit recovery was questioned.

3. Upon reviewing the records, it was noted that the show-cause notice did not recognize the air travel agent's service as an 'input service' due to the lack of evidence linking it to the manufacture/clearance of final products. The statement provided by the appellant regarding air travel lacked specific details confirming the purpose of travel for business. Similarly, the documents related to the auction of scrap did not convincingly support the claim that the auctioning service was directly linked to the manufacture of final products. The appellant failed to establish a clear nexus between the activities in question and the business operations.

4. Consequently, the Tribunal found that the appellant did not present a prima facie case to warrant a waiver of predeposit. The appellant was directed to pre-deposit the amount of Rs.49,549/- within four weeks. Compliance with the directive would result in the waiver of pre-deposit and a stay of recovery for the penalty amount. The case was scheduled for compliance reporting on a specified date.

This detailed analysis highlights the key arguments, evidentiary considerations, and the Tribunal's decision regarding the waiver of predeposit and stay of recovery sought by the appellant in relation to the service tax demand under scrutiny.