2013 (12) TMI 1223 - AT - Service Tax

Cenvat credit taken on input service - Separate accounts not maintained - Common input services used in manufacture Waiver of Pre-deposit Held that - The provisions prescribed a time limited for CENVAT credit taken on the common input services and reverse it so as to avert a demand under Rule 6(3) of the CENVAT Credit Rules 2004 but the assessee did not heed it - Now they claim to have reversed the inadmissible credit for the period from 1.4.2008 at a belated stage Assessee is clearing both dutiable and exempted final products - They could have refrained from taking CENVAT credit on the common input services if it was their case that the quantum of credit attributable to the exempted final products was not segregable - The appellant however chose to take CENVAT credit of the entire amount of service tax paid on common input services Appellant failed to make out a prima facie case for waiver the appellant directed to deposit Rupees ten lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal partial stay granted.

Summary

Issues:
- Appellant's request for waiver and stay of adjudged dues
- Demand for inadmissible CENVAT credit on common input services
- Appellant's compliance with Rule-6 provisions
- Applicability of extended period of limitation

Analysis:
The appellant sought waiver and stay of adjudged dues amounting to Rs.17,15,577/- due to clearing both dutiable and exempted final products without separate accounts for common input services. The demand included an amount of over Rs.16,00,000/- calculated at 10% of exempted goods price, with education cesses added. The appellant argued compliance with Rule-6 provisions post 1.4.2008 but claimed inability to address pre-2008 period due to lack of stipulated reversal basis. The appellant also contended against invoking the extended limitation period, citing delayed departmental objection and inability to claim Finance Act 2010 benefits.

The Tribunal found the appellant's plea unconvincing regarding the post-1.4.2008 period, noting that Rule-6 amendments allowed for calculating and reversing inadmissible CENVAT credit on common input services to avoid demands under Rule 6(3). Despite claiming belated reversal, the appellant's non-compliance with the prescribed time limit was highlighted. Regarding the pre-2008 period, where both dutiable and exempted goods were cleared without segregating CENVAT credit, the Tribunal held the appellant liable to predeposit a reasonable portion of the demand. Consequently, the appellant was directed to predeposit Rs.10,00,000/- within six weeks, with waiver and stay granted for the remaining dues upon compliance.

In conclusion, the Tribunal upheld the demand for inadmissible CENVAT credit, emphasizing the appellant's responsibility to comply with Rule-6 provisions and predeposit a specified amount to address the liability arising from the mixed clearance of dutiable and exempted final products without segregation of CENVAT credit.