2013 (10) TMI 252 - AT - Service Tax

CENVAT Credit Waiver of Pre-deposit - input services - promotional activities - LIC insurance for employees Held that - credit relates to the services availed for promotional activities to promote the sales of motorcycles. Such advertising and promotional activities are directly related to business of appellant and covered under the definition and as also by various decisions - Similarly, the service tax paid on the LIC insurance for the employees as also for car used by officials etc. have been held to be eligible services by various High Courts - One such reference can be made to Karnataka High Court decision in the case of CCE, Bangalore vs. Stanzen Toyotetsu India (P) Ltd. 2011 (4) TMI 201 - KARNATAKA HIGH COURT - almost all the disputed service have been held to be cenvatable - Prima facie appellant has a good case in its favour - a part of credit stand reversed Stay granted.

Summary

Issues:
Confirmation of duty against the applicant for the period April 2008 to March 2012 by denying Cenvat credit on various services.

Analysis:
The judgment by the Appellate Tribunal CESTAT New Delhi, delivered by Ms. Archana Wadhwa, confirmed a duty of Rs.2,11,04,897 against the applicant for the period April 2008 to March 2012 due to the denial of Cenvat credit on various services. The major part of the credit was availed on services used for industrial construction related to setting up, renovating, and modernizing the factory. These services were found to be covered in the definition of inputs and were specifically excluded from 1.4.2011. Additionally, a significant portion of the credit was related to services for promotional activities aimed at boosting motorcycle sales, which were deemed directly linked to the appellant's business and considered eligible under the definition, supported by various decisions. The tribunal noted that service tax paid on LIC insurance for employees and car usage by officials was also considered eligible services by several High Courts, citing the Karnataka High Court decision in the case of CCE, Bangalore vs. Stanzen Toyotetsu India (P) Ltd. [2011(3) STR 444-Kar]. The tribunal acknowledged that most disputed services had been deemed cenvatable by various decisions, indicating a strong case in favor of the appellant. Notably, a part of the credit had already been reversed, along with interest and penalty, with the deposit deemed sufficient under section 35F of the Central Excise Act, leading to the dispensation of the pre-deposit condition for the balance amount of dues and penalties. Consequently, the stay petition was allowed, providing relief to the appellant.

This detailed analysis of the judgment showcases the tribunal's consideration of various aspects, including the nature of services, their eligibility for credit, relevant legal precedents, and the appellant's compliance with deposit requirements under the Central Excise Act. The decision reflects a nuanced understanding of the applicable laws and precedents in the context of the disputed duty and Cenvat credit issues, ultimately resulting in a favorable outcome for the appellant.