2014 (2) TMI 412 - AT - Service Tax

Validity of credit taken - Cenvat credit availed on Input Service Distributors Proportionate distribution made or not Held that - Following Eveready Industries India Ltd. Versus CCE 2013 (12) TMI 1378 - CESTAT CHENNAI - proportionment done by the applicant is correct - there appears to be calculation error in the quantification of the demand of tax - the applicant directed to deposit a sum of Rupees Ten lakhs as pre-deposits upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues:
- Application for waiver of pre-deposit of Cenvat credit
- Proper distribution of credit by Input Service Distributors (ISD)
- Calculation error in demand quantification
- Commissioner's order following Tribunal's decision
- Examination of previous Tribunal orders in applicant's own case

Analysis:
1. The applicant filed an application seeking waiver of pre-deposit of Cenvat credit amounting to Rs.56,13,893/- along with interest and penalties. The main contention revolved around the proper distribution of credit by the Input Service Distributors (ISD) in proportion to the Chennai unit's turnover concerning the company's total turnover. The applicant availed the credit based on ISD challans issued by their Head office and sales office.

2. The advocate for the applicant referenced previous Tribunal decisions in similar cases, such as Ecof Industries, Asian Paints Ltd., and TVS Motor Co. Ltd., to support the claim that the credit taken by the applicant was appropriate. Additionally, the advocate highlighted a calculation error in the quantification of the demand, emphasizing the need for a reevaluation.

3. On the contrary, the Assistant Commissioner argued that the Commissioner's order aligned with a previous Tribunal decision in the applicant's own case. The Tribunal noted that both parties presented various decisions on the issue. Notably, in the applicant's previous case, the Tribunal had ruled in favor of the applicant, affirming the correctness of the proportionment done by the applicant.

4. The Tribunal acknowledged the Commissioner's adherence to the Tribunal's order from 2009 in the applicant's case. However, the Tribunal directed the applicant to deposit a sum of Rs.10,00,000/- within six weeks due to a perceived calculation error in the demand quantification. Upon compliance with this directive, the pre-deposit of the remaining tax, interest, and penalties would be waived, and recovery stayed during the appeal's pendency.

5. The Tribunal's decision emphasized the importance of examining the order dated June 15, 2012, during the appeal hearing. The ruling reflected a balanced approach, considering both parties' arguments and previous legal precedents to ensure a fair and just resolution of the dispute.