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2014 (12) TMI 369 - AT - Central ExciseCENVAT credit - place of removal - services are post-manufacturing activity - Board vide Letter F. No. 345/1/2008-TRU dated 27.6.2008 - Held that - Board has clarified that input service credit is eligible in respect of payment of service tax under Section 66A. It appears that the said circular was not placed in the case of PMP Auto Components (P) Ltd. (2012 (6) TMI 529 - CESTAT, MUMBAI). We also find force in the submission of the learned counsel regarding the limitation. it is noted that the Hon ble Bombay High Court in the case of Alumayer India Pvt. Ltd. (2014 (2) TMI 356 - BOMBAY HIGH COURT) observed that when the position in law has been settled only as a result of decision of Larger Bench, it cannot be postulated that there was necessarily a suppression on the part of the assessee merely on the basis that the assessee had not applied for a licence and has not paid the duty. The Hon ble Bombay High Court waived the predeposit and remanded the matter to the Tribunal for final hearing without requiring the appellants to deposit the duty. - Applicant has made out a strong prima facie case for waiver of predeposit of entire amount of dues. Accordingly, we grant waiver of predeposit of entire amounts of dues and stay its recovery during the pendency of the appeal - Stay grated.
Issues:
- Denial of CENVAT credit on warranty services rendered by dealers outside India - Applicability of service tax under reverse charge mechanism - Interpretation of Rule 2(l) of the CENVAT Credit Rules, 2004 - Clarification on input service credit eligibility under CENVAT Credit Rules, 2004 - Assertion of limitation on the demand of tax - Comparison with relevant legal precedents and circulars Analysis: 1. The judgment addresses the denial of CENVAT credit on warranty services provided by dealers outside India to the applicant, a manufacturer of Two Wheelers and Three Wheelers. The adjudicating authority rejected the input service credit, citing that the services were post-manufacturing activities beyond the place of removal, as per Rule 2(l) of the CENVAT Credit Rules, 2004. The demand for tax, interest, and penalty for the period January 2007 to December 2010 was confirmed. 2. The appellant argued that no service tax was payable under reverse charge mechanism for services performed in Srilanka and Bangladesh, as per the Taxation of Services Rules. They contended that warranty services are eligible for CENVAT credit, as established in previous Tribunal decisions. The appellant also referenced a Board's circular supporting service tax credit under Section 66A. The appellant highlighted the issue of limitation and cited relevant case law and decisions to support their position. 3. The Revenue contended that the denial of credit was justified not only due to post-manufacturing activities but also because the services were rendered abroad. They relied on a Tribunal decision in a similar case. The Revenue argued that the appellant's claim regarding non-payment of service tax under reverse charge mechanism was irrelevant to the denial of CENVAT credit in the present case. 4. The Tribunal examined the arguments and found that the denial of CENVAT credit primarily based on services being post-manufacturing activities was not acceptable. The Tribunal referenced earlier decisions supporting warranty services as input services. The Tribunal also analyzed a Board's circular clarifying the eligibility of input service credit for service tax paid under Section 66A. The Tribunal acknowledged the appellant's argument on limitation, citing a Bombay High Court decision on suppression and predeposit waiver. 5. Considering the facts, the Board's circular, and the Bombay High Court decision, the Tribunal concluded that the appellant had a strong case for the waiver of predeposit of the entire amount of dues. Accordingly, the Tribunal granted a waiver of predeposit and stayed the recovery of dues during the appeal process, allowing the stay application. This detailed analysis of the judgment provides insights into the issues raised, legal interpretations made, and the final decision reached by the Tribunal in the case.
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