2008 (9) TMI 520 - AT - Service Tax

Stay Cenvat Credit - Demand was confirmed after denying credit in respect of service tax paid on Mandap Keeper service. The contention of appellant is that the applicant are holding annual meetings for their dealers and for that purpose they get together of their employees and these activity is in relation to their business activity and are entitled for credit. Contention of revenue is that credit is taken in respect of service tax paid by the manufacturer, if the same is in or in relation to the manufacture of dutiable final products directly or indirectly. Held that prima facie not a fit case for the waiver.

Summary

Issues:
Waiver of pre-deposit of duty amount in relation to service tax paid on Mandap Keeper service.

Analysis:
The appellant filed an application seeking a waiver of pre-deposit of duty amounting to Rs. 2,08,924/-, as the demand was confirmed after denying credit for service tax paid on Mandap Keeper service. The appellant argued that holding annual meetings for dealers falls within the scope of business activity and should entitle them to credit. On the other hand, the revenue contended that credit can only be taken for service tax paid by the manufacturer directly or indirectly related to the manufacture of dutiable final products. The Tribunal referred to the definition of "input service" under the credit rules, which includes services used in or in relation to the manufacture of final products, as well as activities related to business like accounting, auditing, financing, etc. The Tribunal found that the Mandap Keeper service did not fall within the scope of input service for total waiver of duty. The appellant failed to demonstrate financial hardship, leading to the direction for the deposit of the entire duty amount within six weeks.

This judgment highlights the importance of establishing a direct or indirect relation of a service with the manufacture of final products to claim credit under the input service definition. The Tribunal emphasized that mere business activities may not always qualify for credit unless they are directly linked to the manufacturing process or the clearance of final products. Additionally, the judgment underscores the necessity for parties seeking waivers to provide evidence of financial hardship to support their claims effectively. The decision serves as a reminder for taxpayers to ensure that their claims for credit align with the specific criteria outlined in the relevant rules and regulations to avoid potential liabilities or penalties.