2014 (1) TMI 62 - AT - Central Excise

Cenvat credit on capital goods - The appellants may have the prima facie case on merits in respect of the cenvat credit availed by the appellant on capital goods i.e. cables which are used for installing 66 KV electric plants for supply of power to their manufacturing unit and also the input service credit for installation of such 66 KV electric plants. Cenvat credit on service tax Held that - Following MODERN PETROFILS Versus COMMISSIONER OF C. EX., VADODARA 2010 (7) TMI 319 - CESTAT, AHMEDABAD - There is no dispute as to receipt of input services. Availment of Cenvat credit Waiver of Pre-deposit Held that - The issue is disputable - MS channels, angles etc. used in the manufacturing premises for supporting steam line, water line etc.- the appellant directed to deposit Rupees four lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues: Stay petition for waiver of pre-deposit of duty amount, interest, and penalty based on ineligible cenvat credit availed by the appellant.

Analysis:
1. The appellant filed a stay petition seeking the waiver of pre-deposit of duty amount, interest, and penalty totaling Rs.17,32,270, confirmed by lower authorities due to ineligible cenvat credit availed on various grounds.

2. Upon hearing both sides and examining the records, the Tribunal found that the appellant may have a prima facie case on merits concerning the cenvat credit availed on capital goods like cables used for installing 66 KV electric plants and input service credit for the installation of such plants.

3. The Tribunal also noted that the cenvat credit of service tax paid on various input services, including courier services and maintenance services, was supported by invoices in the name of sales officers at specific locations, indicating no dispute regarding the receipt of such services.

4. However, regarding the cenvat credit availed for materials like MS channels and angles used in the manufacturing premises to support steam and water lines, a disputable issue arose. The credit was taken after an amendment to the definition of inputs under the Cenvat Credit Rules, 2004, in February 2010.

5. In light of the above, the Tribunal directed the appellant to pre-deposit Rs.4 lakhs within eight weeks and report compliance before a specified date. Upon verification of compliance, the Tribunal allowed the waiver of pre-deposit for the remaining amounts involved, staying the recovery until the appeal's disposal.

This judgment by the Appellate Tribunal CESTAT Ahmedabad addressed the issues raised in the stay petition for the waiver of pre-deposit of duty amount, interest, and penalty related to the appellant's availing of cenvat credit deemed ineligible by the lower authorities. The Tribunal found merit in some aspects of the appellant's case while identifying disputable issues in others, ultimately directing a partial pre-deposit and allowing the waiver subject to compliance verification.