2013 (8) TMI 207 - AT - Central Excise

Pre-deposit Stay Application - Cenvat credit of service tax paid for the services rendered by the commission agents for sales promotion of their final products Held that - Judgment of the Hon ble High Court of Gujarat in the case of Cadila Healthcare Ltd 2013 (1) TMI 304 - GUJARAT HIGH COURT is on merits and against the Appellants but appellant was under a bonafide belief and availed the cenvat credit of the service tax paid on commission agent services - Question of limitation is debatable and arguable - appellants needs to be put to some condition to hear and dispose the appeal Thus, the appellant directed to pre-deposit an amount of Rs.10,000/- within a period of four weeks.

Summary

Issues involved:
- Stay petition for waiver of pre-deposit of an amount
- Availing cenvat credit for services rendered by commission agents
- Challenge against penalties imposed

Analysis:
The judgment pertains to a stay petition seeking the waiver of pre-deposit of an amount, interest, and penalties imposed by the adjudicating authority and upheld by the first appellate authority. The demand in question relates to the appellant availing cenvat credit of service tax paid for services provided by commission agents for sales promotion of final products. The adjudicating authority confirmed a demand of Rs.3,19,344/-, interest, and imposed a penalty equal to the confirmed amount. The appellant accepted and reversed Rs.2,74,868/- as ineligible cenvat credit, paid interest, and contested the penalties on the remaining amount of Rs.44,476/-. The appellant argued that during the relevant period, the service tax paid on commissions was eligible as cenvat credit. On the contrary, the Revenue contended that the issue of cenvat credit for service tax paid on sales commission was settled by the High Court of Gujarat in a specific case.

The judge considered both sides' arguments and found that the question of limitation concerning the credit of service tax paid on commissions to agents required detailed examination as it involved a mix of law and fact. Despite a judgment by the High Court of Gujarat against the appellant on merits, the judge acknowledged the potential for a genuine belief on the appellant's part while availing the cenvat credit. Recognizing the issue as debatable and arguable, the judge directed the appellant to pre-deposit Rs.10,000/- within four weeks and report compliance before the Deputy Registrar. The compliance report would then be reviewed by the bench for further orders. Subject to the specified compliance, the application for the waiver of pre-deposit of the remaining amounts was allowed, and recovery was stayed pending the appeal's disposal.