2014 (4) TMI 726 - AT - Service Tax

Waiver of pre-deposit - Disallowance of CENVAT Credit - Whether structural parts having been embedded into the earth for structures which are eventually used in the manufacture of cement for an expanded production capacity are capital goods entitling availment of Cenvat credit - Held that - we are not inclined to grant unconditional and total waiver of pre-deposit or unconditional stay of the adjudication order impugned in the appeal - stay granted partly.

Summary

Issues:
1. Waiver of pre-deposit and stay of further proceedings.
2. Disallowance of availed Cenvat credit.
3. Eligibility of Cenvat credit on structural steel items for construction purposes.
4. Judicial precedents and conflicting opinions.
5. Conditions for granting waiver and stay.

Analysis:

1. The judgment addresses the application seeking waiver of pre-deposit and stay of further proceedings following an adjudication order disallowing Cenvat credit and imposing penalties. The relief sought was not unconditionally granted, and specific conditions were imposed for compliance within a stipulated timeframe.

2. The adjudication order disallowed availed Cenvat credit amounting to Rs.6,50,81,557 and directed recovery of the same along with interest under relevant provisions. Additionally, a penalty equivalent to the disallowed credit was imposed for contravention of Cenvat Credit Rules.

3. The disallowance of Cenvat credit was based on the usage of structural steel items, cement, and TMT bars for construction activities related to expanding a cement plant. The contention was that these items, being embedded into earth for civil structures, did not qualify as capital goods eligible for Cenvat credit.

4. The legal arguments presented by the petitioner relied on previous judicial decisions, including an interim order from the High Court and a Tribunal order. In contrast, the respondent cited a Supreme Court judgment to support the validity of the adjudication order, highlighting a conflict in judicial opinions on the matter.

5. The Tribunal, after considering the arguments and precedents, decided not to grant unconditional waiver or stay of the adjudication order. Instead, a conditional waiver was provided, requiring the petitioner to remit 50% of the disallowed Cenvat credit with interest within a specified period. Failure to comply would result in the dissolution of the stay and rejection of the appeal.

Overall, the judgment carefully analyzed the issues surrounding the disallowance of Cenvat credit for construction materials, considered conflicting judicial opinions, and imposed specific conditions for granting waiver and stay, ensuring compliance with the regulatory framework.