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2013 (8) TMI 673 - AT - Service TaxCENVAT credit - Input Service - The assesse were manufacturer of ball and roller bearings chargeable to Central Excise duty in their factory - They avail Cenvat credit of Central Excise duty paid on inputs and capital goods and of Service Tax paid on input services used in or in relation to manufacture of their final products - The department was of the view that the assesse had wrongly taken service tax credit along with interest and imposition of penalty on them under Rule 15 of Cenvat Credit Rules, 2004 - Held that - All the services had nexus with the manufacturing business of the assesse and hence the same being services related to manufacturing business of the assesse would be covered by the definition of input service . Internet Connection Service - Website Development Service - Rent-a-car Service General Insurance Service Held that - As Decided in CCE, Nagpur Versus Ultratech Cement Ltd. 2010 (10) TMI 13 - BOMBAY HIGH COURT interest connection service was held as input service the service of website development was covered by the definition of input as decided in UNIVERSAL CABLES LTD. Versus COMMISSIONER OF C. EX., BHOPAL 2007 (3) TMI 99 - CESTAT,NEW DELHI - The service of rent-a-car was covered by the definition of input service as it was held in COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II Versus J. K. CEMENT WORKS 2009 (1) TMI 146 - CESTAT NEW DELHI - As regards, the service of general insurance for plant and machinery to cover the assesse against losses due to fire, machinery break down etc. - The service was also covered by the definition of input service and would be eligible for Cenvat credit Following COMMISSIONER OF C. EX., RAIPUR Versus BEEKAY ENGG. & CASTINGS LTD. 2009 (6) TMI 96 - CESTAT, NEW DELHI - The total Cenvat credit availed in respect of insurance service, internet access/connection service and website development service was about Rs. 16 lakhs which appeared to had been correctly availed. Waiver of Pre-deposit - Assesse had a prima facie case in their favour and requiring them to pre-deposit the amount of Cenvat credit demand, interest and penalty would cause undue hardship - The requirement of pre-deposit of Cenvat credit demand, interest and penalty was waived for hearing of this appeal and recovery was stayed till the disposal of the appeal Stay Granted Decided in favor of assesse.
Issues:
Recovery of allegedly wrongly taken service tax credit under Rule 15 of Cenvat Credit Rules, 2004 for various services not covered by the definition of 'input service'. Detailed Analysis: The appellant, a manufacturer of ball and roller bearings chargeable to Central Excise duty, availed Cenvat credit of Central Excise duty paid on inputs, capital goods, and Service Tax paid on input services. The department issued a show cause notice for recovery of wrongly taken service tax credit of Rs. 23,45,047/-, specifically for services like telephone services, website development charges, internet connection charges, insurance for plant and machinery, rent-a-cab service, GTA service, repair & maintenance service, and erection and installation service. The Additional Commissioner adjudicated the notice, dropping part of the demand but confirming a significant amount along with interest and penalty under Rule 15(2) of Cenvat Credit Rules, 2004. On appeal to the Commissioner (Appeals), a portion of the credit demand was upheld, while some credit in respect of repair and maintenance charges, erection and installation service, GTA service, and services for removal of goods was allowed. However, a substantial amount of credit demand was upheld along with interest and penalty. The appellant filed the present appeal against this order. During the hearing, the appellant's counsel argued that the services in question, like insurance services, internet connection services, website development charges, and taxi hiring services, are essential for their manufacturing business and should be considered as 'input services'. They cited precedents and argued a strong prima facie case for waiver of pre-deposit of the credit demand, interest, and penalty. The Departmental Representative opposed the stay application, emphasizing that the services lacked nexus with the manufacture of the final product, citing a relevant Supreme Court judgment. The representative argued that the appellant failed to establish a prima facie case for waiver. The Tribunal carefully considered the submissions from both sides and analyzed the records. It noted that the services of website development, internet connection, insurance, and rent-a-car were availed by the appellant. The Tribunal found a prima facie view that these services had a nexus with the manufacturing business, citing relevant judgments. It held that the appellant had a strong case, and pre-deposit of the amount was waived for the appeal hearing, staying the recovery until the appeal's disposal. In conclusion, the Tribunal allowed the stay application, emphasizing the appellant's prima facie case and the undue hardship that pre-deposit would cause. The recovery of the Cenvat credit demand, interest, and penalty was stayed until the appeal's resolution.
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