2014 (10) TMI 415 - AT - Service Tax

Waiver of pre deposit - Irregular CENVAT Credit availed - Management Consultancy Services - Held that - adjudicating authority has committed an error in coming to such a conclusion as the Hon ble High Court of Gujarat in the case of CCE, Ahmedabad-II v. Cadila Healthcare Ltd. 2013 (1) TMI 304 - GUJARAT HIGH COURT has held that Cenvat credit of the service tax paid on Management Consultancy Services can be availed in full, if such services are not exclusively used for exempted services or manufacturing of exempted product. It is undisputed in the case in hand that the appellant is a manufacturer of final product, on which duty liability is discharged when cleared for home consumption and exports also made under bond/LUT. If that be so, we find that the appellant has made out a prima facie case for the waiver of the pre-deposit of the amount involved, as it is not in dispute that the service provider has discharged the service tax liability under the category of Management Consultancy Services , there is no proceedings issued against service provider - Stay granted.

Summary

Issues:
- Stay petitions for waiver of pre-deposit of Cenvat credit amount confirmed as irregular.
- Eligibility of appellant to avail Cenvat credit on Management Consultancy Services.
- Interpretation of High Court ruling on availing Cenvat credit.
- Prima facie case for waiver of pre-deposit based on duty liability discharge.
- Granting of applications for waiver of pre-deposit and stay of recovery.

Analysis:
The judgment by the Appellate Tribunal CESTAT BANGALORE pertains to stay petitions seeking the waiver of pre-deposit of an amount confirmed as irregular Cenvat credit availed by the appellant. The adjudicating authority had raised demands on the appellant, contending that the appellant was ineligible to avail Cenvat credit on service tax paid by the service provider under 'Management Consultancy Services'. However, the Tribunal found that the adjudicating authority erred in its conclusion. It referred to a judgment by the Hon'ble High Court of Gujarat, which held that Cenvat credit on Management Consultancy Services could be availed if not exclusively used for exempted services or products. Since the appellant was a manufacturer of final products with duty liability discharged upon clearance for home consumption and exports made under bond/LUT, the Tribunal determined that the appellant had established a prima facie case for the waiver of pre-deposit.

The Tribunal noted that the service provider had discharged the service tax liability under 'Management Consultancy Services', and no proceedings were initiated against the service provider. Consequently, the Tribunal allowed the applications for waiver of the pre-deposit of the amounts involved and stayed the recovery until the disposal of appeals. This decision highlights the importance of analyzing the specific circumstances of the case and applying relevant legal precedents to determine the eligibility of availing Cenvat credit, ultimately leading to the grant of relief to the appellant in this matter.