2012 (8) TMI 168 - AT - Service Tax

Waiver of pre-deposit Extended period of limitation input service denial of Cenvat credit - input services of Travel Agent, Custom House Agent, Tour operation, Telephone, Insurance and Courier etc and paid the service tax from the Cenvat Credit towards the payment of service tax liability for providing output services of repair, operation and maintenance, erection and commissioning Held that - these services are required for providing the output service by the appellant. CHA service was used for importing Water Treatment and Components for Water treatment Plant, which was used for installation or repair and maintenance etc. Similarly, the service of Tour operator and Courier service were also used in providing of service. Even if a view is taken that the term Used cannot cover the definition of input service, it would be purely a question of interpretation and therefore, show cause notice could not have been issued invoking extended period. Show cause notice was issued in 2008 whereas, the period of demand is 2003-2004. Demand was time barred. Decided in favor of assessee.

Issues Involved:
Interpretation of the term 'Used' in the definition of input service for availing Cenvat credit and its relation to providing output services.
Validity of the denial of Cenvat credit availed by the appellant.
Request for waiver of pre-deposit and stay against recovery of arrears during the appeal process.

Analysis:

Issue 1: Interpretation of the term 'Used' in the definition of input service

The case involved the appellant availing service tax credit on various input services but facing a challenge regarding the utilization of these services in relation to providing output services. The department contended that the services must be used by the service provider for delivering output services, which the appellant failed to demonstrate adequately. The primary contention was centered around the interpretation of the term 'Used' in the context of input services. The appellant argued that the services, such as Custom House Agent (CHA), Tour Operator, and Courier services, were essential for their operations, like importing components for water treatment plants, installation, repair, and maintenance. The debate revolved around whether the appellant successfully utilized the input services for providing their output services.

Issue 2: Validity of denial of Cenvat credit

The proceedings were initiated to deny the Cenvat credit availed by the appellant, amounting to Rs.3,12,356. The impugned order confirmed the demand for Cenvat credit availed, along with interest and penalty under Section 78 of the Finance Act, 1994. The appellant challenged this denial, arguing that the department's interpretation of the term 'Used' was incorrect and contrary to legislative intent. They contended that the services in question were indeed utilized in providing their output services, such as maintenance, repair, erection, commissioning, and installation of water treatment plants. The appellant presented a strong prima facie case for the validity of the Cenvat credit availed and sought a waiver of pre-deposit and stay against the recovery of arrears during the appeal process.

Issue 3: Request for waiver of pre-deposit and stay against recovery of arrears

The appellant sought a waiver of pre-deposit and stay against the recovery of the amounts of duty during the pendency of the appeal. The learned counsel emphasized that the appellant had a strong prima facie case on both merits and limitation. They argued that the question of interpretation regarding the term 'Used' in the definition of input service was complex, especially considering the various services involved. The appellant highlighted examples where input services like CHA were directly linked to their service provision activities. The Tribunal, considering the complexity of the matter and the prima facie case in favor of the appellant, granted the waiver of pre-deposit and stay against the recovery of dues during the appeal process.

In conclusion, the judgment primarily focused on the interpretation of the term 'Used' in the context of input services for availing Cenvat credit and its relation to providing output services. The Tribunal granted the waiver of pre-deposit and stay against recovery, acknowledging the complexity of the matter and the appellant's prima facie case in their favor.

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