2013 (1) TMI 462 - AT - Service Tax

Waiver of pre-deposit - Stay of recovery - Banking and Other Financial Services - CENVAT Credit denied - Invoices did not indicate registration number of the service provider - Invoices were addressed to the Mumbai Head Office which did not have input service distributor registration - Held that - It is not in dispute that BOFS covered by the invoices raised on the appellant s Head Office was actually used by the appellant in the manufacture and clearance of their final products. The tax-paid nature of BOFS is also not in dispute. The department has no case that any part of BOFS covered by any given invoice was diverted by the Head Office. Prima facie, the entire quantum of BOFS covered by each invoice in question was used by the appellant. On these facts, the substantive benefit of CENVAT credit is prima facie admissible to the appellant. Waiver of pre-deposit and stay of recovery allowed

Summary

Issues:
Waiver of pre-deposit and stay of recovery in relation to denied CENVAT credit and penalty imposed on the appellant for the period from December 2007 to February 2010.

Analysis:
The appellant sought waiver of pre-deposit and stay of recovery concerning the total CENVAT credit of Rs.3,33,987/- denied to them, along with an equal amount of penalty imposed. Despite no representation from the appellant, the judge reviewed the records and heard the Superintendent (AR). The denial of CENVAT credit was based on the invoices not indicating the registration number of the service provider and being addressed to the Mumbai Head Office, which was not a registered input service distributor. The show-cause notice had only raised the issue of invoices being addressed to the Mumbai Head Office without the distributor registration. The judge noted that the other ground not raised in the notice could not be considered by the department at this stage as it would exceed the notice's scope. It was established that the services covered by the invoices were used by the appellant in manufacturing their final products, and the tax-paid nature of these services was undisputed. There was no evidence that any part of the services covered by the invoices was diverted by the Head Office. Consequently, the judge found that the substantive benefit of CENVAT credit was prima facie admissible to the appellant, and it could not be denied on minor procedural grounds. Therefore, the judge ordered the waiver of pre-deposit and stay of recovery for the adjudged dues.

This judgment highlights the importance of adherence to the grounds raised in a show-cause notice and the principle that substantive benefits cannot be denied based solely on minor procedural issues. It underscores the need for a clear nexus between the denied benefit and any procedural irregularities. The decision also emphasizes the significance of ensuring that services covered by invoices are actually utilized for eligible purposes to support the admissibility of credits. Overall, the judgment provides clarity on the criteria for granting waivers and stays in cases involving denied credits and penalties, emphasizing the need for a substantive analysis of the facts and circumstances.