2013 (11) TMI 1412 - AT - Service Tax

Waiver of pre deposit - Cenvat Credit - Job work - demand confirmed on the ground that applicant had availed excess credit in respect of the input services which are used in the processing of the goods, which were cleared on payment of appropriate service and part of the goods are cleared at nil rate of Service Tax by claiming the benefit of exemption Notification No.8/2005-S.T. dt. 1.3.2005 - Held that - part of the processed goods are cleared at nil rate of Service Tax by availing the benefit of exemption. It is also not disputed by the applicant, that credit has been availed in respect of the common inputs as well as input services, which are used in the processing of exempted as well as the processed goods on which the Service Tax has been paid - applicants are undertaking process which does not amount to manufacture and in view of this the applicants are clearing part of their processed goods on payment of appropriate service tax. In view of this, prima facie the applicant has not made out a case for waiver of service tax. The ratio of the above decision is not applicable to the facts of the present case - Assessee directed to make a pre deposit - Partial stay granted.

Summary

Issues:
1. Waiver of total amount of Service Tax, interest, and penalties.
2. Availing excess credit in respect of input services.
3. Availing credit in respect of common inputs and input services.
4. Allegation of suppression with intent to evade payment of duty.
5. Liability to pay service tax in the category of business auxiliary service.
6. Invoking the extended period for time-barred demands.
7. Dispute regarding clearance of processed goods at nil rate of Service Tax.
8. Applicability of the decision in Tata Motors case.
9. Amount to be deposited by the applicant.

1. Waiver of Total Amount of Service Tax, Interest, and Penalties:
The applicant filed an application seeking a waiver of the total amount of Service Tax of Rs.71,00,000/- along with interest and penalties. The demand was confirmed due to availing excess credit in respect of input services and common inputs used in processing goods cleared at appropriate payment of Service Tax and under Notification No. 8/2005-S.T. The Tribunal found that the applicant did not make a case for a total waiver but directed a deposit of Rs. 12 lakhs within eight weeks, with the remaining amount of dues waived pending appeals.

2. Availing Excess Credit in Respect of Input Services:
The demand of Rs.9,51,400/- was confirmed as the applicant had availed excess credit for input services used in processing goods cleared at appropriate Service Tax rates and under Notification No. 8/2005-S.T. The applicant's contention regarding the clearance of goods and the benefit claimed was considered, but the Tribunal upheld the demand based on the availed credit for common inputs and services.

3. Availing Credit in Respect of Common Inputs and Input Services:
A demand of Rs.61,57,105/- was confirmed as the applicant availed credit for common inputs and input services used in processing goods cleared with the benefit of Notification No. 8/2005-S.T. The Revenue argued that the process undertaken did not amount to manufacture, making the applicant liable to pay service tax as a business auxiliary service.

4. Allegation of Suppression with Intent to Evade Payment of Duty:
The applicant denied allegations of suppression with intent to evade duty, citing statutory returns filed showing clearance of goods under Notification No. 8/2005-S.T. The Tribunal noted the reliance on a decision by the Bombay High Court but ultimately found that the applicant had not established a case for the waiver of service tax.

5. Liability to Pay Service Tax in the Category of Business Auxiliary Service:
The Revenue contended that the applicant's processing of goods on behalf of the principal manufacturer did not amount to manufacture, making them liable to pay service tax as a business auxiliary service. The Tribunal upheld the demand based on the availed credit for common inputs and services used in processing goods.

6. Invoking the Extended Period for Time-Barred Demands:
Regarding time-barred demands, the Revenue argued that the extended period was applicable due to the applicant's improper availing of the benefit of notification. The Tribunal found the extended period invokable based on the circumstances of the case.

7. Dispute Regarding Clearance of Processed Goods at Nil Rate of Service Tax:
The applicant cleared part of the processed goods at nil rate of Service Tax under Notification No. 8/2005-S.T. The Tribunal acknowledged this fact but upheld the demand due to the availed credit for common inputs and services used in processing goods.

8. Applicability of the Decision in Tata Motors Case:
The Tribunal discussed the Tata Motors case where credit denial was contested for inputs procured by a job worker. The Tribunal differentiated the present case, stating that the applicant's process did not amount to manufacture, and thus, the waiver of service tax was not justified based on the Tata Motors decision.

9. Amount to be Deposited by the Applicant:
While the applicant did not establish grounds for a total waiver of the service tax demand, the Tribunal directed a deposit of Rs. 12 lakhs within eight weeks. Upon compliance, the pre-deposit of the remaining dues was waived, and recovery stayed during the pendency of appeals. Compliance was to be reported by a specified date.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT MUMBAI covers the issues involved comprehensively, providing insights into the legal reasoning and decisions made by the Tribunal.