2012 (11) TMI 243 - AT - Central Excise

Application for waiver of pre-deposit Duty, interest & penalty Credit of service tax has been taken on rent paid of the premises of the job worker Held that - As the job worker is not paying duty and he is working under the Notification and hence we find prima facie the applicant has not made out a case of waiver of total duty. The activity relating which the assessee wants to take credit was in relation to the business and in respect of the premises of the manufacturer. The present case as the rent is in respect of the premises of the job worker, who is an independent manufacturer and not paying duty, therefore, ratio of the decision are not applicable to the facts of the present case. In view of the above applicant failed to make out a case for total waiver of duty. Directed to deposit 25% of the duty - Stay Granted

Summary

Issues:
- Waiver of pre-deposit of duty, interest, and penalty
- Denial of credit for service tax paid on rent of job worker's premises
- Appeal dismissed for non-compliance under Section 35F of the Central Excise Act
- Applicant's contention regarding job worker's activity and credit availed
- Revenue's argument on job worker's independence and duty liability
- Tribunal's analysis of applicant's case and reliance on previous decisions

Analysis:
The judgment revolves around the application for waiver of pre-deposit of duty, interest, and penalty amounting to Rs.13,80,649/- due to the denial of credit for service tax paid on the rent of the job worker's premises. The adjudicating authority confirmed the demand, leading to an appeal before the Commissioner (Appeals) where the applicant was directed to deposit 50% of the duty and penalty. However, the applicant's failure to comply resulted in the appeal being dismissed for non-compliance under Section 35F of the Central Excise Act.

The applicant argued that the job worker's activity was related to manufacturing, allowing for credit on the rent paid for the job worker's premises. Citing the Coca Cola case and a Tribunal decision, the applicant contended that the rent payment and credit availed were part of their business activity. On the other hand, the revenue contended that the job worker was an independent manufacturer, making the service tax paid on the job worker's premises ineligible for credit, leading to the confirmation of the demand.

The Tribunal observed that the job worker was an independent manufacturer not paying duty under Notification 214/86, and the premises where rent was paid were not part of the applicant's manufacturing unit. Relying on previous decisions, the Tribunal found that the applicant failed to establish a case for a total waiver of duty. Consequently, the Tribunal directed the applicant to deposit 25% of the duty within six weeks, with the remaining dues waived upon compliance, and recovery stayed until the specified date.