2014 (1) TMI 147 - AT - Service Tax

Waiver of pre-deposit of duty, interest thereof and equal amount of penalty - Availment of the Cenvat credit of the Service Tax paid by the service provider who provided the Commercial and Industrial Construction services - Interpretation of provisions of Rule 6(5) of Cenvat Credit Rules, 2004 - Held that - It can be seen from the above reproduced rule that it was amended w.e.f. 1-4-2011, credit of the services in question in the appeals in hand, were falling under the category of (zzq) i.e. Commercial and Industrial Construction services. The restriction of provisions of Rule 6(5) of Cenvat Credit Rules, 2004 was only that if these services are used exclusively in or in relation to the manufacture of exempted goods or providing exempted services, credit should not be availed. Since there is no dispute that the appellant is manufacturing dutiable products, prima facie, for the prior to 1-4-2011, Cenvat credit of Service Tax paid cannot be denied to the appellant - Stay granted.

Summary

Issues Involved: Interpretation of Rule 6(5) of Cenvat Credit Rules, 2004 regarding eligibility for Cenvat credit on Service Tax paid for Commercial and Industrial Construction services.

In the judgment delivered by Appellate Tribunal CESTAT AHMEDABAD, the two Stay Petitions were filed seeking waiver of pre-deposit of duty, interest, and penalty amounting to Rs. 4,91,533. The issue in both petitions was the same, pertaining to the eligibility of the appellant to avail Cenvat credit on Service Tax paid by the service provider for Commercial and Industrial Construction services. The period in question was from 1-4-2008 to 31-3-2011. The lower authorities had ruled the appellant ineligible for the credit. The Tribunal noted that the services were provided in factory and residential premises, and the key issue was the interpretation of Rule 6(5) of Cenvat Credit Rules, 2004. The rule allowed credit unless the services were used exclusively for exempted goods or services. The rule was amended from 1-4-2011, and the services in question fell under the category of Commercial and Industrial Construction services. As the appellant was manufacturing dutiable products, the Tribunal held that Cenvat credit of Service Tax paid could not be denied to the appellant before 1-4-2011.

Therefore, the Tribunal allowed the applications for waiver of the amounts and stayed the recovery until the disposal of the appeals. The judgment provides clarity on the interpretation of Rule 6(5) of Cenvat Credit Rules, 2004, emphasizing that eligibility for Cenvat credit should not be denied if services are not used exclusively for exempted goods or services, especially when the appellant is engaged in manufacturing dutiable products.