2012 (4) TMI 311 - AT - Service Tax

Department alleged that assessee being not registered as Input Service Distributor are not entitled to CENVAT credit in respect of invoices pertaining to period prior to their obtaining registration Held that - Under the rule 7 of CENVAT credit rules there is no bar denying the credit in respect of the invoices of the period prior to date of the registration decided in favour of assessee as requirement of pre-deposit for hearing of the appeal is waived and recovery of the dues is stayed till disposal of the appeal.

Summary

Issues:
- Waiver of pre-deposit and stay recovery of amount
- Entitlement to CENVAT credit prior to registration as "Input Service Distributor"

Analysis:
The case involved an application by M/s Beico Industries Pvt. Ltd. for waiver of pre-deposit and stay recovery of a confirmed amount and penalty. The issue revolved around the distribution of CENVAT credit in respect of input services prior to the applicant's registration as an "Input Service Distributor." The department contended that the applicant was not entitled to CENVAT credit for invoices issued before obtaining the registration. A show-cause notice was issued, and the penalty was confirmed by the Assistant Commissioner, which was reduced on appeal by the Commissioner (Appeals).

The appellant argued that Rule 7 of the Cenvat Credit Rules does not bar them from availing CENVAT credit for invoices issued before registration. Citing a previous tribunal ruling, the appellant requested a waiver of pre-deposit. On the other hand, the Revenue representative argued that registration as an "Input Service Distributor" is a prerequisite for distributing input service credit, and thus, the credit was rightly denied by the lower authority.

Upon considering the arguments, the judge found that Rule 7 of the CENVAT credit rules does not prohibit the credit in respect of invoices issued before the registration date. The judge noted a strong prima facie case in favor of the applicant and granted the waiver of pre-deposit, staying the recovery of dues until the appeal's disposal.

In conclusion, the stay petition was allowed, and the applicant was granted the waiver of pre-deposit, with recovery of dues stayed pending the appeal's outcome.