2013 (11) TMI 102 - AT - Service Tax

Disallowance of cenvat credit on various services Waiver of Pre-deposit Held that - The authority has made efforts to justify stand of the demand - Taking into account the undertaking of the appellant that Rs. 1.25 crore credit shall not be utilized till disposal of appeal there shall be waiver of pre-deposit - the appellant has not utilized credit for the last 2 years and shown fair attitude to cooperate to dispose the appeal Stay granted.

Summary

Issues: Disallowance of Cenvat Credit, Relevance of credit for banking and financing services, Commission paid to foreign agents, Service tax paid on C&F and telephone services, Utilization of credit, Waiver of pre-deposit

The judgment addresses the disallowance of Cenvat Credit amounting to Rs. 75 lakhs, with a total disallowance of Rs. 2,10,549. The appellant argues that the disallowed amount is related to banking and financing services, commission paid to foreign agents, and service tax on C&F and telephone services. The appellant also highlights that a significant portion of the credit, approximately Rs. 1.25 crore, has remained unutilized for two years and offers not to use it for a reasonable period if the appeal is resolved within that timeframe.

The Revenue contends that the Rs. 75 lakhs credit pertains to bank guarantee and commission, emphasizing the need to assess their relevance. They raise questions regarding the attribution of Service Tax and commission paid to foreign agents to manufacturing activities. Additionally, the balance credit of around Rs. 10 lakhs is also subject to scrutiny to establish any nexus.

After hearing both parties and reviewing the findings of the Adjudicating Authority, the Tribunal acknowledges the efforts made to support the demand. However, considering the appellant's undertaking not to utilize the significant credit of Rs. 1.25 crore until the appeal's disposal, the Tribunal decides to waive the pre-deposit requirement until 31st January, 2014. The Tribunal notes the appellant's non-utilization of the credit for the past two years and their willingness to cooperate in expediting the appeal process. The appellant is given the option to request a hearing notice on 31st January, 2014.

The judgment, delivered by Shri D.N. Panda, provides a balanced approach by considering both the appellant's arguments and the Revenue's concerns. It emphasizes the need for testing the relevance of the credits in question, particularly those related to banking and financing services, commission payments, and service tax on specific services. The Tribunal's decision to waive the pre-deposit requirement showcases a practical and cooperative stance, encouraging the appellant's cooperation in resolving the appeal efficiently.