2014 (7) TMI 157 - AT - Service Tax

Waiver of pre-deposit of service tax - CENVAT Credit - reversal of credit for providing exempted services - Held that - decision of the Tribunal in the case of Jost s Engineering Co. Ltd. (2013 (8) TMI 463 - CESTAT MUMBAI) was not available at the time of passing of the adjudicating order. Further, the appellants had reversed whole of the credit availed on common input services. In view of this, the matter requires consideration afresh by the adjudicating authority. The impugned order is set aide and the matter is remanded to the adjudicating authority to decide afresh - Decided in favour of assessee.

Summary

Issues: Application for waiver of pre-deposit of service tax, maintaining separate records for input services, applicability of Rule 6 of Cenvat Credit Rules.

1. Application for waiver of pre-deposit of service tax:
The applicants filed an application seeking waiver of pre-deposit of service tax, interest, and penalty amounting to &8377; 2,14,04,295. The demand was confirmed under Rule 14 of the Cenvat Credit Rules, 2004 read with Sec. 73(2) of the Finance Act, 1994. The contention of the applicants was that they had already reversed the credit availed on common input services used for both exempted and taxable services. They relied on a Tribunal decision where a similar demand was set aside after considering the reversal of the credit. The Tribunal found merit in the applicant's case and waived the pre-deposit of dues, staying the recovery during the appeal.

2. Maintaining separate records for input services:
The Revenue argued that as the applicants had not maintained separate records of input services, the demand was justified under Rule 6 of the Cenvat Credit Rules. However, the Tribunal noted a previous case where a similar demand was set aside after the reversal of credit on common input services. In light of this, the Tribunal found that the applicants had presented a strong case in their favor, leading to the waiver of pre-deposit and a stay on recovery during the appeal process.

3. Applicability of Rule 6 of Cenvat Credit Rules:
The Revenue relied on Rule 6 of the Cenvat Credit Rules to support the demand, emphasizing the lack of separate records by the applicants. However, the Tribunal referenced a prior case where a similar demand was set aside post the reversal of credit on common input services. Considering this precedent, the Tribunal concluded that the applicants had sufficiently demonstrated their case, resulting in the waiver of pre-deposit and a halt on recovery pending the appeal process.

In summary, the judgment by the Appellate Tribunal CESTAT MUMBAI involved the applicants seeking a waiver of pre-deposit of service tax, interest, and penalty. The Tribunal considered the issue of maintaining separate records for input services and the applicability of Rule 6 of the Cenvat Credit Rules. Ultimately, the Tribunal found in favor of the applicants, citing a previous case where a similar demand was set aside due to the reversal of credit on common input services. As a result, the Tribunal waived the pre-deposit of dues and stayed the recovery process during the appeal, remanding the matter back to the adjudicating authority for fresh consideration.