2015 (5) TMI 664 - HC - Central Excise

Waiver of pre deposit - CENVAT Credit - whether the appellant is entitled for the benefit of cenvat credit on the service tax paid by the appellant - Held that - Following decision of ABB Limited Vs. CCE 2011 (3) TMI 248 - KARNATAKA HIGH COURT it is held that Tribunal was not justified in ordering the pre-deposit in the manner stated in its order - Partial stay granted.

Summary

Issues involved:
1. Entitlement to cenvat credit on outward transportation charges
2. Consideration of contra judgments
3. Application of law by the Tribunal

Entitlement to cenvat credit on outward transportation charges:
The case involved a manufacturer seeking cenvat credit for freight outward charges, insurance services charges, and job charges paid by their job workers. The Department contended that the services did not qualify as input services. The Adjudicating Authority and Commissioner (Appeals) upheld the disallowance of cenvat credit. The Tribunal directed the appellant to deposit a specified amount, pending appeal. The appellant challenged this order before the High Court, arguing that a Karnataka High Court decision favored their entitlement to cenvat credit. The High Court noted the favorable decision and modified the Tribunal's order, reducing the pre-deposit amount significantly.

Consideration of contra judgments:
The High Court considered the presence of contradictory judgments, one in favor of the Department and others favoring the assessee. The appellant cited a Karnataka High Court decision supporting their case. The High Court acknowledged the relevance of this decision and found prima facie merit in the appellant's argument. It emphasized the need for the Tribunal to assess the applicability of the Karnataka High Court decision to the present case during the main appeal hearing. Ultimately, the High Court modified the Tribunal's order based on the favorable judgment cited by the appellant.

Application of law by the Tribunal:
The Tribunal's order requiring the appellant to make a substantial pre-deposit was challenged before the High Court. The appellant argued that the Tribunal overlooked a Karnataka High Court decision supporting their entitlement to cenvat credit on outward transportation charges. The High Court agreed with the appellant, finding merit in their argument based on the favorable judgment. Consequently, the High Court modified the Tribunal's order, reducing the pre-deposit amount significantly and staying the collection of the balance amount during the appeal's pendency. The High Court emphasized that the Tribunal should consider the applicability of the Karnataka High Court decision during the main appeal hearing.

This detailed analysis covers the issues involved in the legal judgment, highlighting the arguments presented, the Tribunal's decision, and the High Court's modifications based on relevant legal precedents.