2012 (9) TMI 632 - AT - Service Tax

Cenvat credit - company was providing both taxable services and exempted services - appellants submitted that the credit is mostly in respect of capital goods only and there is only a small portion of credit attributable to input services Held that - Credit is mostly in respect of capital goods needs to be verified by the adjudicating authority - matter is remanded for verification

Summary

Issues:
1. Delay in filing the appeal.
2. Utilization of cenvat credit for taxable and exempted services.
3. Application of Rule 6(3)(c) of Cenvat Credit Rules, 2004.
4. Pre-deposit requirement for admission of appeal.
5. Verification of credit mostly in respect of capital goods.
6. Decision based on the Tribunal's ruling in a specific case.

Analysis:
1. The judgment addresses a delay of seven days in filing the appeal, which the court condones based on reasons provided in the COD application, ensuring the appeal can proceed despite the delay.

2. The case involves the utilization of cenvat credit by a service provider for both taxable and exempted services. The Revenue argues that the credit should have been limited to 20% of the tax payable as per Rule 6(3)(c) of the Cenvat Credit Rules, 2004, resulting in a confirmed amount for a specific period.

3. The appellant's counsel argues that the credit primarily relates to capital goods, with only a small portion attributable to input services. It is contended that Rule 6(3)(c) should apply only to credit taken for inputs and input services, not capital goods. As this argument was not raised earlier, the court waives the pre-deposit requirement and proceeds to dispose of the appeal.

4. The judgment highlights the need for verification by the adjudicating authority regarding the nature of the credit, emphasizing that the impugned order is set aside for further examination. The decision is to be based on a previous ruling of the Tribunal in a specific case involving BSNL and the Central Excise Commissioner.

5. Ultimately, the stay petition and appeal are disposed of, with the matter remanded for verification of the factual submission regarding the credit being mostly related to capital goods. The decision-making process is guided by the Tribunal's precedent in the BSNL case, ensuring consistency in the application of relevant legal principles.