2011 (8) TMI 982 - AT - Central Excise

Waiver of pre deposit - Denial of credit proportionate to the amount retained as security - input services - Held that - appellant explains that a small percentage of the contract amounts awarded to different service providers for executing the expansion project of their plant was retained for settlement at the final stage of the contract after verification that all the terms and conditions of the contract has been fulfilled. Their case is that the tax amounts for which credit has been taken have been paid by the service providers to the exchequer. They rely on Board Circular No. 8771/5/2008-CX. dated 17-1-2008 to justify their claims that they are entitled to take credit of duty paid by the service providers - Stay granted.

Summary

Issues: Recovery of credit sought by the appellant without full payment to service providers. Interpretation of Rule 4(7) of Cenvat Credit Rules. Applicability of Board Circular No. 8771/5/2008-CX.

In the present case, an appeal was filed against an order passed by the Commissioner, directing the recovery of an amount along with interest and penalty, while denying the credit sought by the appellants. The recovery was related to credit availed without making full payment to service providers, contrary to Rule 4(7) of the Cenvat Credit Rules, as per the Revenue's argument. The appellants contended that a portion of the contract amounts was retained for settlement at the final stage, ensuring fulfillment of all contract terms, and that the tax amounts for which credit was taken had been paid by the service providers to the exchequer. They relied on Board Circular No. 8771/5/2008-CX to support their claim for entitlement to credit of duty paid by the service providers.

Upon examination of the facts, the Tribunal found that the Revenue had not established any revenue loss, while the appellants successfully demonstrated a case for the waiver of pre-deposit. Consequently, the Tribunal allowed the stay petition filed by the appellants, indicating a favorable outcome for the appellants based on the presented evidence and arguments.

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