2014 (5) TMI 763 - AT - Service Tax

Waiver of pre-deposit of duty - CENVAT Credit - inputs - activity of construction of the plant - applicant relied upon the Board Circular dated 29-4-2011 wherein it has been clarified that credit in respect of services received before 1-4-2011 is available. - Held that - Applicant vide a communication referred to above informed the Revenue regarding completion of the Unit and regarding clearance of clinker in the month of March 2011. Therefore in view of the Board Circular, the applicant has a strong prima facie case for complete waiver of pre-deposit of the dues. Accordingly, the pre-deposit of the dues is waived and recovery stayed till the disposal of the appeal. - Stay granted.

Summary

Issues:
Waiver of pre-deposit of duty, interest, and penalty due to denial of credit of service tax on works contract service post-amendment to the definition of "input" in the Cenvat Credit Rules.

Analysis:
The appellant sought waiver of pre-deposit of duty amounting to Rs. 56,40,148/-, interest, and penalty. The dispute arose from the denial of credit of service tax on works contract service after an amendment to the definition of "input" in the Cenvat Credit Rules post 1-4-2011. The appellant contended that the construction of the plant was completed before 31-3-2011, and they reconciled accounts to take credit on invoices received after that date for work done earlier. They established that a new unit, Cement Unit-II, was set up at the existing plant, with production starting in January 2011, and clearances of clinker to the cement plant began on 1-3-2011. The appellant relied on a Board Circular dated 29-4-2011, clarifying the availability of credit for services received before 1-4-2011.

The Revenue acknowledged the Board Circular entitling the appellant to credit for services completed before 1-4-2011. However, they argued that the appellant failed to provide evidence of receiving taxable services before the specified date. Despite this, the appellant had communicated the completion of the unit and clinker clearance to the Revenue in March 2011, aligning with the Board Circular's provisions. Consequently, the appellant had a strong prima facie case for a complete waiver of pre-deposit of dues. As a result, the Tribunal granted the waiver and stayed the recovery until the appeal's final disposal.

In conclusion, the Tribunal allowed the stay application, emphasizing the appellant's compliance with the Board Circular's requirements for credit on services received before 1-4-2011. The waiver of pre-deposit was justified based on the appellant's communication to the Revenue regarding the completion of the unit and clinker clearance, aligning with the Circular's provisions.