2013 (11) TMI 1362 - AT - Central Excise

Waiver of pre-deposit of input service credit - Denail of Credit - Held that - Show Cause Notice was issued for denial of the credit in view of the provisions of Rule 9 (1) (b) of the Cenvat Credit Rules. We find that the provisions of Rule 9 (1) (b) of the Cenvat Credit Rules were not applicable on the credit of service tax during the period. We therefore find that the applicant has made out a case for total waiver of the dues. Therefore, the pre-deposit of the dues is waived and recovery thereof stayed for hearing of the appeal - Stay granted.

Summary

Issues:
Application for waiver of pre-deposit of input service credit of Rs.19,71,599 based on denial of credit for service tax paid on taxable service received.

Analysis:
The applicant sought waiver of pre-deposit of input service credit amounting to Rs.19,71,599, which was confirmed after denying credit for service tax paid on taxable service received. The applicant argued that although the service provider initially did not pay the duty during the relevant period, it was later paid by the service provider, recovered from the applicant, and supplementary invoices were issued. The applicant contended that during the disputed period, there was no prohibition under Rule 9(1)(b) of the Cenvat Credit Rules regarding credit availed on the basis of supplementary invoices. The introduction of Rule 9(1)(bb) debarring such credit was effective only from 1.4.2011. The applicant relied on precedents such as L. G. Balakrishnan and Bros Ltd vs CCE 2010 (18) ELT 432 and JSW Steel Ltd vs CCE 2012 (277) ELT 189 to support their case.

The Revenue, on the other hand, argued that supplementary invoices were not valid documents as duty had been paid by the service recipient as per the Revenue's request. The Revenue also contended that even though Rule 9(1)(bb) was introduced from 1.4.2011, the intention to disallow such credit existed earlier as well. The Show Cause Notice was issued based on the provisions of Rule 9(1)(b) of the Cenvat Credit Rules. However, the Tribunal found that Rule 9(1)(b) was not applicable to the credit of service tax during the relevant period. Consequently, the Tribunal concluded that the applicant had successfully demonstrated a case for a complete waiver of the dues. Therefore, the pre-deposit of the dues was waived, and recovery was stayed pending the appeal hearing.

In summary, the Tribunal allowed the stay petition, granting the applicant's request for waiver of the pre-deposit of input service credit. The decision was based on the finding that the provisions of Rule 9(1)(b) of the Cenvat Credit Rules were not applicable to the disputed credit of service tax during the period in question.