2015 (8) TMI 815 - AT - Service Tax

Waiver of pre deposit - Denial of CENVAT Credit - Capital goods - exemption under Notification No.25/2007-ST, dt.22.05.2007 - Held that - with respect to CENVAT Credit of inputs, used in the making of a civil structure for providing an output service, credit has been held to be admissible as per decision of Andhra Pradesh High Court in the case of CCE Vishakhapatnam-II Vs Sai Sahmita Storages (P) Ltd (2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT) - appellant has made out a prima facie good case for complete waiver of the confirmed dues and penalties. Accordingly, it is ordered that there will be a stay on recoveries of the amounts and penalties till the disposal of these appeals. - Stay granted.

Summary

Issues:
- Admissibility of CENVAT Credit on inputs and input services used in the construction and development of a port terminal.
- Interpretation of the definition of inputs and input services under the CENVAT Credit Rules, 2004.
- Conflict in judicial decisions regarding the admissibility of CENVAT Credit for construction-related activities.

Analysis:

The appellant filed stay applications challenging the orders passed by the Commissioner Service Tax Ahmedabad regarding the admissibility of CENVAT Credit on inputs and input services used in the construction and maintenance of a port terminal. The Revenue contended that such credit was not admissible as the construction of the port was considered an exempted service. The appellant argued citing conflicting judgments and relied on decisions like Navratna S.G. Highway Prop. Pvt.Ltd. and CCE Vishakhapatnam-II to support the admissibility of the credit.

Upon hearing both sides, the Tribunal analyzed the definitions of inputs and input services under the CENVAT Credit Rules, 2004. Referring to the case law of Navratna S.G. Highway Prop. Pvt.Ltd., the Tribunal emphasized the need for inputs to be directly used in providing an output service for the credit to be admissible. The Tribunal highlighted the similarity in the definitions of inputs and input services for service providers and drew parallels with the decision of the Andhra Pradesh High Court regarding the necessity of inputs like cement and TMT bars for providing specific services.

Furthermore, the Tribunal referenced the decision of CCE Vishakhapatnam-II to support the admissibility of CENVAT Credit for inputs used in constructing civil structures for providing output services. The Tribunal noted that the High Court dismissed appeals by the Revenue, emphasizing the essentiality of inputs like cement and TMT bars for providing storage services. The Tribunal concluded that the appellant had a prima facie case for the waiver of confirmed dues and penalties based on the judicial interpretations presented.

In light of the judicial interpretations provided, the Tribunal granted a stay on the recoveries of the amounts and penalties until the final disposal of the appeals, as pronounced in court on 17.06.2014.