2013 (12) TMI 1129 - AT - Service Tax

Cenvat credit denied on Commercial Construction Services - Waiver of Pre-deposit Held that - Commissioner of Central Excise (Appeals) had denied the benefit of Cenvat credit on the ground that appellant has not submitted any evidence like work contract agreement or invoices in support of their contention that construction services were used in repair and renovation of the factory - it is stand taken by the department that commercial construction service was used by the appellant in the construction of factory premises - appellants have strong prima facie case in their favour - Pre-deposit waived till the disposal stay granted.

Summary

Issues:
- Waiver of pre-deposit and stay of recovery of Excise duty and penalty
- Denial of Cenvat credit on commercial construction services used in the construction of factory premises

Waiver of pre-deposit and stay of recovery of Excise duty and penalty:
The case involved a stay application filed by M/s. Dalmia Chini Mills Ltd. seeking waiver of pre-deposit and stay of recovery of Excise duty amounting to Rs. 3,23,830/- along with an equal amount of penalty, confirmed by the Commissioner of Central Excise (Appeals). The appellant had availed Cenvat credit on service tax paid for commercial construction services used in constructing the factory premises. However, the credit was denied to them based on a show cause notice stating that input services for a commercial property were not covered under the definition of input services as per Rule 2(l) of Cenvat Credit Rules. Despite the denial by the original authority and the Commissioner (Appeals), the appellant challenged the order-in-appeal, seeking waiver of pre-deposit and stay of recovery of the confirmed dues.

Denial of Cenvat credit on commercial construction services used in the construction of factory premises:
During the proceedings, the Commissioner of Central Excise (Appeals) had denied the benefit of Cenvat credit to the appellant, citing the lack of evidence such as work contract agreements or invoices to support the contention that the construction services were used in the repair and renovation of the factory. The department's stand, as per the show cause notice, was that commercial construction services were utilized by the appellant in constructing the factory premises. However, the presiding judge found that the appellants had a strong prima facie case in their favor. Noting the absence of evidence supporting the denial of Cenvat credit and considering the appellant's strong case, the judge waived the pre-deposit and granted a stay against the recovery of duty and penalty until the appeal was disposed of.

---