2014 (11) TMI 364 - AT - Central Excise

Waiver of pre-deposit of duty - Denial of CENVAT Credit on input services - Applicability of Rule 9(1)(b) of CCR - payment of service tax by fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act - Held that - By Notification No.13/2011 CE (NT) dated 31st March 2011, an amendment had taken place in Rule 9(1)(b) and a new clause (bb) was inserted which deals with the Service Tax with effect from 01.04.2011. A s during the relevant period the provision denying the credit of Service tax was not in force therefore, the applicant has made out a case for 100% waiver of the requirement of pre-deposit. Accordingly we grant waiver of pre-deposit of entire amount of service tax availed by the applicant as CENVAT Credit along with interest and penalty and stay recovery thereof during the pendency of the appeal - Stay granted.

Summary

Issues:
- Seeking waiver of pre-deposit of duty amounting to Rs. 1,04,54,000/- along with interest and penalty imposed under Section 78 of the Finance Act, 1994.
- Interpretation of Rule 9(1)(b) of the Cenvat Credit Rules, 2004 regarding denial of CENVAT Credit of service tax.
- Applicability of Rule 9(1)(b) to the case involving service tax credit.
- Effect of Notification No.13/2011 CE (NT) dated 31st March 2011 on Rule 9(1)(b) regarding service tax credit.

Analysis:

The judgment dealt with the applicant's plea for the waiver of pre-deposit of duty, interest, and penalty amounting to Rs. 1,04,54,000/- imposed under Section 78 of the Finance Act, 1994. The dispute arose from the denial of CENVAT Credit of service tax to the applicant due to the service provider's actions related to fraud or suppression of facts. The applicant contested the denial citing Rule 9(1)(b) of the Cenvat Credit Rules, 2004, which, according to the applicant's counsel, pertained to Central Excise duty and Customs duty, not service tax. The contention was that since the disputed amount was related to service tax only, Rule 9(1)(b) did not apply. On the contrary, the A.R. argued that the denial of credit extended to service tax as well under the CENVAT Credit Rules, encompassing Central Excise, Customs, and Service Tax.

Upon considering the submissions, the judgment clarified that Rule 9(1)(b) specifically addressed CENVAT Credit of Central Excise duty or Customs duty, not service tax. Furthermore, it was highlighted that an amendment through Notification No.13/2011 CE (NT) dated 31st March 2011 introduced a new clause (bb) dealing with Service Tax effective from 01.04.2011. Since the provision denying credit of Service tax was not in force during the relevant period of the case (July 2009), the applicant was deemed eligible for a 100% waiver of the pre-deposit requirement. Consequently, the judgment granted the waiver of pre-deposit of the entire service tax amount availed by the applicant as CENVAT Credit, along with interest and penalty, and stayed the recovery during the appeal process.