2015 (2) TMI 965 - AT - Central Excise

Waiver of predeposit of duty - Denial of CENVAT Credit - Insurance service and various other services - Held that - Out of the total credit disallowed, ₹ 4,21,458/- relates to insurance service. I find that that insurance service not only relates to the employees but also to the plant, machinery and stocks. The credit disallowed in respect of payroll services is about ₹ 50,341/- and the credit of ₹ 14,673/- is towards photocopier service and towards travel agency service the credit disallowed is ₹ 39,623/-. I find that the applicant has made out a prima facie case for waiver of predeposit except for corporate membership services and photocopier services. Accordingly, I direct the applicant to predeposit a sum of ₹ 30,000/- within a period of four weeks - Upon such deposit, predeposit of the balance dues stands waived and recovery thereof stayed during the pendency of the appeal. - Partial stay granted.

Summary

Issues:
- Denial of CENVAT credit on input services
- Waiver of predeposit of duty
- Interpretation of "input service" in relation to the manufacture of final product

Denial of CENVAT Credit on Input Services:
The applicant sought waiver of predeposit of duty amounting to &8377; 5,43,931/- along with interest and penalty, which was denied by the adjudicating authority. The denial was based on the disallowance of CENVAT credit on input services like Insurance Services, Corporate Membership Services, Payroll Services, Photocopier Services, and Travel Agency Services. The Commissioner (Appeals) upheld the adjudication order, leading to the appeal before the tribunal.

Interpretation of "Input Service" in Relation to the Manufacture of Final Product:
The counsel for the applicant argued that a significant portion of the disallowed credit pertained to insurance services, emphasizing that the services were related to the manufacturing process of the final product. The counsel cited precedents such as CCE Vs. Millipore India Ltd., CCE Vs. Ultratech Cement Ltd., and CCE Vs. Beekay Engg. & Castings Ltd. to support the contention. On the contrary, the Revenue's representative contended that there was no direct nexus between the input services and the manufacture of final products, citing decisions from the Hon'ble Supreme Court and the Tribunal.

Upon examining the submissions from both sides and reviewing the records, the tribunal found that a substantial portion of the disallowed credit, amounting to &8377; 4,21,458/-, was related to insurance services covering employees, plant, machinery, and stocks. The tribunal acknowledged that the applicant had established a prima facie case for waiver of predeposit, except for corporate membership services and photocopier services. Consequently, the tribunal directed the applicant to predeposit a reduced sum of &8377; 30,000/- within four weeks, with the waiver of the remaining balance subject to this deposit. The recovery of the waived amount was stayed during the pendency of the appeal.

This detailed analysis of the judgment addresses the issues of denial of CENVAT credit on specific input services, the request for waiver of predeposit, and the interpretation of "input service" concerning the manufacturing process of the final product.