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2013 (10) TMI 255 - AT - Service TaxCENVAT Credit on the basis of debit note Waiver of Pre-deposit - associated company - the appellant took credit of input tax in respect of input services in both the appeals involving demand of service tax of Rs. 10,97,849/- and Rs. 17,12,995/-, due to disallowance of the credit - Whether failure to follow the mode of grant of CENVAT credit recognized by law debars from eligibility to such credit Held that - Prima facie when the appellant failed to follow prescribed mode, as an interim measure it was directed to deposit 50% of the service tax demanded in each appeal - Subject to compliance realization of the balance demands shall be stayed during pendency of appeals.
Issues: Violation of law in claiming CENVAT credit; Eligibility for CENVAT credit; Compliance with prescribed mode of grant of CENVAT credit.
In this judgment by the Appellate Tribunal CESTAT BANGALORE, the appellant claimed credit of input tax based on a debit note invoice converted into an input credit advice from an associated company, M/s. Grindwell Norton Ltd. The service tax demand of Rs. 10,97,849/- and Rs. 17,12,995/- was disallowed by the adjudicating authority due to the common order-in-original. The appellant argued that the service tax had already been paid by the service provider, and requesting a pre-deposit would prejudice them. On the other hand, the revenue contended that the appellant violated the law by not following the prescribed mode for claiming CENVAT credit, emphasizing that M/s. Grindwell Norton Ltd. was an independent company, not associated with the appellant. After hearing both parties and examining the records, the Tribunal considered whether the failure to adhere to the prescribed mode of granting CENVAT credit rendered the appellant ineligible for such credit. The Tribunal directed the appellant to deposit 50% of the service tax demanded in each appeal within four weeks as an interim measure. The appellant was instructed to comply by a specified date, with the realization of the remaining demands stayed during the appeal process. This decision aimed to address the issue of compliance with the recognized mode of CENVAT credit grant as mandated by law, ensuring procedural correctness and fairness in the tax credit system.
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