2013 (10) TMI 202 - AT - Service Tax

Admissibility of CENVAT Credit - Service Tax on Input Services Waiver of Pre-deposit - Held that - Assessee contented that the input service credit taken was in respect of the services which were used both for dutiable and exempted services provided by the appellant - Therefore, the credit was rightly taken - So far as the retrospective amendment of Rule 6(3)(b) of the CENVAT Credit Rules, 2004 is concerned reliance was placed upon Dabur Pharma Ltd Vs CCE Kolkata-I 2010 (5) TMI 734 - CESTAT KOLKATA - It was the case of the appellant that the input service credit had been taken for the services utilized for providing both dutiable and exempted services - The issue involved was regarding interpretation of the definition of input service, given in Rule 2(l) of the CENVAT Credit Rules and needs deeper consideration, which can be done at the time of final hearing only - Since the appellant had reversed the CENVAT Credit the same was considered as sufficient deposit in this case to grant stay for the remaining amount Stay granted.

Summary

Issues:
- Admissibility of CENVAT Credit on input services for both dutiable and exempted services.
- Interpretation of the definition of input service under Rule 2(l) of the CENVAT Credit Rules.
- Retrospective amendment of Rule 6(3)(b) of the CENVAT Credit Rules, 2004.

Analysis:
The appellant filed an application against the Order-in-Appeal (OIA) passed by the Commissioner (Appeals), upholding a previous order. The main issue revolved around the appellant claiming CENVAT Credit for Service Tax on various input services like advertising charges, lease rental charges, housekeeping charges, and outsource labor charges. The appellant utilized this credit for paying Service Tax on their output services. The Revenue argued that as the appellant provided both taxable and exempted services, the CENVAT Credit claimed was inadmissible since it did not relate to providing dutiable output services. Additionally, the Revenue contended that once an option for availing CENVAT Credit is exercised within a financial year, it cannot be withdrawn.

The appellant's advocate argued that the CENVAT Credit was rightfully claimed as the input services were used for both dutiable and exempted services. The advocate also cited case laws to support their stance. Furthermore, the advocate mentioned that a portion of the CENVAT Credit had already been reversed, requesting a stay on the remaining amount.

After hearing both parties and examining the case records, the Tribunal acknowledged the need for a deeper consideration of the definition of input service as per Rule 2(l) of the CENVAT Credit Rules. The Tribunal noted that since the appellant had reversed a portion of the CENVAT Credit, it was deemed as a sufficient deposit to grant a stay on the recovery of the remaining amount of dues and penalties until the appeal's final disposal.

Therefore, the Tribunal decided to stay the recovery of the outstanding amount pending the final hearing, considering the appellant's actions and the complexities involved in interpreting the rules related to CENVAT Credit on input services for both dutiable and exempted services.