2014 (5) TMI 612 - AT - Service Tax

Waiver of pre deposit - CENVAT Credit - Creative and art work services - Publication of magazine - Held that - In the case of creative and art work service and garden maintenance services, there can be some doubt regarding eligibility.. However, at this stay stage, the benefit should go to the applicant. In the case of foreign exchange marketing services, I am of the view that this is related to procurement of inputs and marketing of their final products and has close nexus with the manufacturing activity and business. The amount relating to this service is the major amount disputed. Considering overall facts and circumstances, including the case laws, I waive the requirement of predeposit of dues arising from the impugned order for admission of appeal and there shall be stay on collection of such dues during pendency of the appeal - Stay granted.

Summary

Issues:
1. Eligibility of Cenvat credit on creative and art work services, garden maintenance, and foreign exchange marketing analysis services as input services under Rule 2(l) of CENVAT Credit Rules, 2004.
2. Adjudication of recovery amount along with interest and penalty.
3. Appeal against the order of Commissioner (Appeals) and stay petition.

Analysis:

1. The primary issue in this case revolves around the eligibility of Cenvat credit on various services claimed by the applicant as input services under Rule 2(l) of CENVAT Credit Rules, 2004. The revenue contended that these services did not fall under the definition of input services, leading to the issuance of a show cause notice for recovery of the amounts claimed by the applicant. The applicant, however, argued that the services in question were essential for their business activities, citing relevant case laws to support their claim.

2. The adjudication process resulted in the confirmation of a total amount against the applicant, including interest and penalty. Despite appealing to the Commissioner (Appeals), the applicant did not receive any relief, prompting them to file an appeal along with a stay petition. The arguments presented by both parties focused on the nexus between the services availed and the manufacturing activity of the applicant, with contrasting interpretations of the relevance of the services to the business.

3. The appellate authority considered the arguments put forth by both sides, emphasizing the distinction between inputs and input services under Rule 2(l) of the CENVAT Credit Rules, 2004. While acknowledging the conflicting decisions regarding the eligibility of creative and art work services and garden maintenance as input services, the authority leaned in favor of the applicant at the stay stage. Particularly, regarding foreign exchange marketing analysis services, the authority found a close nexus with the procurement of inputs and marketing of final products, leading to the waiver of predeposit of dues and a stay on the collection of such dues during the appeal's pendency.

In conclusion, the judgment addresses the nuanced interpretation of input services under the CENVAT Credit Rules, 2004, and highlights the importance of establishing a direct nexus between the services availed and the manufacturing activities of the applicant to claim Cenvat credit successfully.