2010 (2) TMI 459 - AT - Service Tax

Cenvat Credit - The Stay Application has been filed for stay of duty demand of Rs. 12,897 and penalty of Rs. 1,60,718 on two counts. The first count is disallowance of Cenvat credit of Rs. 2,013 in respect of service tax paid on cellular phone services availed while bill thereof was not in the name of the assessee and the second count of demand is disallowance of credit of Rs. 10,884 on account of payment of service tax for availing insurance services on the strength of photocopy of insurance policy. Held that - in the light of the decision of Maruti Suzuki Ltd. v. CCE 2009 adjudicatig authority was justified I disallowing the claim on cellular phone. Further held that - in the case of insurance services matter was to be remanded to adjudicating authority to consider claim of assessee if assessee produces relevant documents having force of evidence.

Summary

Issues: Stay of duty demand and penalty on disallowance of Cenvat credit for service tax on cellular phone services and insurance services.

The judgment pertains to a Stay Application filed for a duty demand and penalty imposition on disallowance of Cenvat credit. The duty demand includes disallowance of Cenvat credit for service tax on cellular phone services and insurance services. The Appellant argued that there was evidence to support the Cenvat credit claim and that the penalty was unreasonably imposed. The Respondent, however, contended that the inadmissibility of the Cenvat credit was justified, and the penalty was imposed due to erratic use of the credit.

Upon hearing both sides and examining the record, the Tribunal decided to dispose of the stay application and appeal together, waiving the pre-deposit requirement due to the smallness of the demand. Regarding the disallowance of Cenvat credit for service tax on cellular phones, the Tribunal upheld the decision of the Adjudicating Authority, applying the integrity, dependability, and relevancy test as per the precedent set by the Apex Court in a previous case. The Tribunal found the disallowance justified based on this test.

Concerning the service tax on insurance services, the Tribunal ruled that if the Appellant provides relevant documents with evidentiary force, the authority should reconsider the claim. If the authority determines that the service tax was paid meeting the required tests, the claim would be deemed admissible. On the matter of penalty, the Tribunal found no mala fide intent evident in the record to support the penalty imposition, granting full relief to the Appellant in this regard.

In conclusion, the appeal was allowed partially, remanding the issue of set-off of service tax against duty liability back to the adjudicating authority for reconsideration. The stay application was disposed of accordingly, following the decisions made on the individual issues discussed.