2012 (10) TMI 106 - AT - Service Tax

Cenvat credit - demand on account of denial of abatement of 40% from gross receipt for assessee providing both Mandap Keeper Service and Catering Service - Revenue s case is that the appellants have availed Cenvat credit and hence they are not eligible for such abatement Held that - Credit of inputs used in relation to exempted output service is not allowed to be taken - Appellant has already paid substantial part of the demand on the first count and interest - it is sufficient for the purpose of Section 35F of Central Excise Act for hearing the Appeal pre-deposit waived

Summary

Issues:
1. Irregular availment of cenvat credit and short payment of service tax during a specific period.
2. Disallowance of input service credit for certain services.
3. Confirmation of service tax demand and excess debited amount.
4. Appeal against the order of the Commissioner (Appeal) before the Tribunal.
5. Contesting the demand for denial of abatement and restriction on credit utilization.

Analysis:
1. The Appellate Tribunal CESTAT, New Delhi, addressed the issue of irregular availment of cenvat credit and short payment of service tax during the period from June 2004 to March 2007. The Additional Commissioner's order allowed cenvat credit on specific services but disallowed input service credit for travel services, packing activity services, and placement services. The demand for service tax and excess debited amount was confirmed, leading to a penalty imposition under relevant rules and sections.

2. The Appellants filed an appeal with the Commissioner (Appeal) against the order, which was subsequently rejected. The Tribunal considered the appeal challenging the denial of abatement and restriction on credit utilization. The Appellants contended that they did not avail cenvat credit on inputs or input services for the services in question. The Revenue argued against the abatement, claiming the Appellants availed cenvat credit. However, the specific rebuttal of the Appellants' contention was not provided by the Revenue.

3. Regarding the demand of Rs. 3,83,655, the Appellants argued that they provided both exempted and taxable services but did not restrict credit utilization to 20% of the tax payable as required by the Cenvat Credit Rules 2004. The Revenue insisted on applying Rule 6(5) for taking credit on special category services but enforcing the restriction under Rule 6(3)(c) for credit utilization. The Tribunal analyzed the sub-rules of Rule 6 and emphasized the allowance of full credit for tax paid on services specified in Rule 6(5).

4. Considering the Appellant's partial payment of the demanded amount and interest, the Tribunal waived the balance dues for the purpose of hearing the appeal under Section 35F of the Central Excise Act. The order concluded with a stay on the collection of remaining amounts during the appeal's pendency, ensuring a fair adjudication process.

This detailed analysis of the judgment by the Appellate Tribunal CESTAT, New Delhi, highlights the key issues, arguments presented, and the Tribunal's considerations for each aspect of the case, providing a comprehensive overview of the legal proceedings and decisions made.