2013 (11) TMI 451 - AT - Service Tax

Waiver of pre deposit - cenvat credit in respect of Cargo handling service and warehousing service - output service viz. maintenance and repair services - providing taxable and exempted services - Rule 6(3) - Held that - It is appropriate to grant waiver of pre-deposit and stay all further proceedings pursuant to the impugned adjudication order, on condition that the petitioner remits 80% of the Cenvat credit amount ordered to be recovered along with interest thereon under Rule 14 read with Section 75 of the Act i.e. on 80% of the Cenvat credit ordered to be recovered, within four weeks from today. - stay granted partly.

Summary

Issues:
1. Availing Cenvat credit on input services not entirely used for specified output service.
2. Recovery of irregularly availed Cenvat credit.
3. Applicability of Rule 6(3) of the Cenvat Credit Rules, 2004.
4. Waiver of pre-deposit and stay of further proceedings.

Analysis:
1. The judgment pertains to the availing of Cenvat credit on certain input services not fully utilized for the specified output service of maintenance and repair services. The petitioner was found to have availed Cenvat credit on services like cargo handling and warehousing, which were not entirely used for the specified output service. Consequently, proceedings were initiated for the recovery of the irregularly availed Cenvat credit amounting to Rs.51,01,636. The adjudication order confirmed the recovery of the said amount along with interest and penalties under relevant rules and sections of the Finance Act.

2. The petitioner contended that as per Rule 6(3) of the Cenvat Credit Rules, 2004, if output services are not wholly utilized for providing a service and separate accounts are not maintained for taxable and exempted services, 20% of the tax payable on taxable output services could be cleared by availing Cenvat credit, with the remaining amount to be paid in cash. However, the petitioner had discharged the entire output service tax liability by availing Cenvat credit without remitting the 20% in cash as per the rule.

3. Considering the circumstances, the judgment granted a waiver of pre-deposit and stayed further proceedings based on the impugned adjudication order. The petitioner was directed to remit 80% of the Cenvat credit amount ordered to be recovered, along with interest, within four weeks. Failure to comply with the directive would result in the dissolution of the stay granted without further reference to the Tribunal. The counsel for the petitioner was present during the proceedings, providing sufficient notice of the liabilities under the order.

4. The judgment ensures that the appeal will be listed for hearing in due course, maintaining the procedural fairness and adherence to the legal requirements. The decision reflects a balanced approach by granting conditional relief while upholding the principles of tax compliance and statutory provisions under the Cenvat Credit Rules, 2004.