2014 (2) TMI 40 - AT - Service Tax

Availment of CENVAT Credit - Waiver of pre deposit - Penalty under Section 76 77 and 78 - Held that - it is appropriate to grant waiver of pre-deposit and stay all further proceedings pursuant to the impugned order on the condition that petitioner remits 50% of the specified liability of tax as assessed in terms of paragraph (i) and (iii) of the adjudication order namely the amount of tax relatable to cenvat credit erroneously alleged to have been availed and the interest thereon. Waiver is granted to the extent of penalty imposed under Sections 76 77 78 of the Act and 50% of the component of the demand of tax and interest thereon - Conditional stay granted.

Summary

Issues:

1. Wrong availment of cenvat credit.
2. Liability under Sections 73/75 of the Finance Act, 1994 and penalty under Sections 76, 77, 78 of the Act.
3. Interpretation of rules regarding cenvat credit for output services from a branch office.
4. Granting waiver of pre-deposit and stay of further proceedings.

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Issue 1: Wrong Availment of Cenvat Credit

The appellant was held to have wrongly availed cenvat credit of Rs.29,73,096, leading to an order for recovery along with applicable interest and penalties under Sections 73/75 and 76, 77, 78 of the Act. The liability was assessed based on Rules 4(A) and 3(A) of the Service Tax Rules read with Rule 9(2) of the Cenvat Credit Rules, 2004. The appellant relied on a judgment from the Bangalore Bench of the Tribunal to argue against the liability, citing a factual distinction between the cases and similarities in normative principles. The Tribunal decided to consider these arguments further during the final hearing.

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Issue 2: Liability and Penalties

The liability for wrong availment of cenvat credit was assessed under Sections 73/75 of the Finance Act, 1994, and penalties were imposed under Sections 76, 77, 78 of the Act. The Tribunal granted a waiver of pre-deposit and stayed further proceedings on the condition that the appellant remits 50% of the specified tax liability and interest within four weeks. The waiver excluded the penalties imposed under Sections 76, 77, 78 of the Act and 50% of the tax demand and interest. Failure to comply with the deposit requirement by the specified date would result in the dissolution of the waiver and stay without further reference to the appellant.

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Issue 3: Interpretation of Rules for Cenvat Credit

The case involved an interpretation of rules regarding the availment of cenvat credit for output services rendered from a branch office. The appellant sought to distinguish their case from a previous judgment by highlighting factual differences while acknowledging similarities in normative principles. The Tribunal decided to consider these aspects further during the final hearing to make a well-informed decision.

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Issue 4: Granting Waiver and Stay

In light of the circumstances, the Tribunal found it appropriate to grant a waiver of pre-deposit and stay all further proceedings based on the impugned order. The appellant was required to remit 50% of the specified tax liability related to the wrongly availed cenvat credit and the interest within a specified timeframe. The waiver excluded penalties and a portion of the tax demand and interest. Non-compliance with the deposit requirement by the specified date would lead to the dissolution of the waiver and stay without further reference to the appellant.

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This detailed analysis covers the various issues involved in the legal judgment, providing a comprehensive overview of the Tribunal's decision and the considerations taken into account for each issue.