2013 (2) TMI 221 - AT - Central Excise

CENVAT credit of service tax utilized for the payment of Central Excise duty at the time of clearance and manufacture of excisable goods - pre-deposit of amount with interest and penalty - Held that - As relying upon the Circular issued by DG Audit vide F.No. 381/23/2010/862 dated 30.03.2010 wherein it has been clearly held that once the credit is admissible and taken it forms part of a common pool and a manufacturer who is paying excise duty on the goods manufactured and also is a service tax assessee liable to pay service tax, can utilize the credit available for payment of service tax or excise duty according to this convenience - pre-deposit of dues are waived - stay granted.

Summary

Issues:
Waiver of pre-deposit of duty, interest, and penalty in relation to availing credit of service tax on input services for providing output services.

Analysis:
The appellant sought a waiver of pre-deposit of duty, interest, and penalty amounting to Rs.1,28,02,575/-, contending that they are entitled to credit in respect of input services used in the manufacture of excisable goods and providing taxable output services. The Revenue, however, argued that credit of service tax on services not directly or indirectly related to the manufacture of final products cannot be used for payment of duty at the time of clearance. The Revenue highlighted that the appellant, as a provider of output services, should utilize credit availed for input services directly related to providing output services. Additionally, the Revenue pointed out that the appellant wrongly utilized credit for services not related to the manufacture of goods for paying excise duty.

The Tribunal referred to a stay order issued by the WZB, Ahmedabad, where it was held that once credit is admissible and taken, it forms part of a common pool that can be used for payment of service tax or excise duty as per convenience. The Tribunal noted that the circular issued by the DG Audit supported this position. Consequently, the Tribunal granted a waiver of the pre-deposit of dues, interest, and penalty during the pendency of the appeal, as the appellant made out a prima facie case in their favor based on the circular's applicability to the case.

Given the consistent stance taken by the Tribunal in granting waivers on similar grounds in previous cases, the Tribunal decided to waive the pre-deposit of dues for the current appeal and stayed the recovery of the same during the appeal's pendency. The Registry was directed to list the appeal for hearing on a specified date due to the significant amount of duty involved, exceeding Rs.1 crore.