2008 (6) TMI 102 - AT - Service Tax

Appellant reversed credit on objection of department which they took of tax paid on GTA service for outward transportation of its final products - demand of interest affirmed for the period between availment of credit and the reversal of the same - held that the impugned service was covered by definition of input service and that the assessee could utilize the credit for payment of service tax due. It is argued that the impugned demand of interest is not therefore sustainable stay granted

Summary

Issues:
- Availment of credit on GTA service for outward transportation of final products
- Department's objection regarding the credit availed
- Demand of interest for the period between credit availment and reversal
- Application for waiver of predeposit and stay of recovery

Analysis:

1. Availment of Credit on GTA Service for Outward Transportation: M/s. Premier Polyweaves (P) Ltd. took credit of tax on GTA service for the outward transportation of its final products and used the credit for duty payment on the final products. The department objected to this credit claiming that the outward transportation did not constitute an input service eligible for credit.

2. Department's Objection and Impugned Order: The department's objection led to the assessee reversing the credit availed. The impugned order upheld the demand for interest for the period between the credit availment and its reversal. The department argued that the credit was not valid as the outward transportation did not involve an eligible input service.

3. Application for Waiver of Predeposit and Stay of Recovery: The appellant sought a waiver of predeposit and stay of recovery. The appellant's counsel relied on a previous decision by the South Zonal Bench of the Tribunal in India Cements Ltd. v. CCE, which held that the impugned service fell under the definition of 'input service,' allowing the assessee to use the credit for service tax payment.

4. Tribunal's Decision: After considering the arguments from both sides, the Tribunal found that the impugned order was not in line with the precedent set by the decision in India Cements Ltd. v. CCE. Consequently, the Tribunal directed a waiver of pre-deposit and a stay of recovery of the interest demanded until the final disposal of the appeal. The Tribunal's decision was based on the interpretation that the impugned service qualified as an 'input service,' aligning with the earlier Tribunal ruling.

In conclusion, the Tribunal's judgment favored the appellant by granting a waiver of pre-deposit and a stay of recovery of the interest demanded, citing the precedent set by a previous Tribunal decision regarding the classification of the service in question as an 'input service.'