2012 (11) TMI 729 - AT - Service Tax

Waiver of pre-deposit - denial of CENVAT Credit of duty paid on the products which were sent to job workers - appellant herein availed CENVAT Credit and utilized the goods for rendering the output services of Repair & Maintenance and utilized said credit for discharge of Service Tax liability Held that - providing such service input or input services which go into provision of such output service, if any tax or duty is paid on such input services or inputs, the appellants are eligible to avail CENVAT Credit - waiver of pre-deposit allowed

Summary

Issues:
Waiver of pre-deposit of Service Tax under Section 76 of Finance Act, 1994 for denial of CENVAT Credit on duty paid products sent to job workers.

Analysis:
The appellant filed two Stay Petitions seeking waiver of pre-deposit of Service Tax amounting to Rs. 9,95,150/- along with interest and penalty imposed under Section 76 of the Finance Act, 1994. The core issue revolves around the denial of CENVAT Credit on duty paid products sent to job workers by the appellant. The job workers discharged Central Excise duty liability on the products under the presumption that they were responsible for it. However, the appellant availed CENVAT Credit on the Central Excise duty paid by the job workers and used it for providing 'Repair & Maintenance' services, thereby utilizing the credit for discharging Service Tax liability.

Upon hearing both sides and examining the records, it was noted that the demand was raised on the appellant based on the contention that the availment and utilization of CENVAT Credit were incorrect. The revenue authorities insisted on the reversal of CENVAT Credit and the duty paid amount, considering the credit as ineligible. However, it was acknowledged that the appellant was indeed engaged in providing 'Repair & Maintenance' services, making them eligible to avail CENVAT Credit on taxes or duties paid on inputs or input services used in providing the said output service.

After careful consideration of the submissions, it was established that the appellant had a valid case for the waiver of pre-deposit amounts involved. Consequently, the Stay Petitions for the waiver of pre-deposit amounts were granted, and the recovery of the said amounts was stayed until the appeals were disposed of. The Tribunal found that the appellant had substantiated their claim for the waiver, leading to the decision in their favor.