2013 (11) TMI 46 - AT - Service Tax

CENVAT credit - Service Tax paid by the sub-contractor - Held that - Liability has arisen on the appellant on the ground that he has availed in-eligible CENVAT Credit of Service Tax paid by the sub-contractor. The main thrust of the arguments of the assessee is that they have manufactured the final product for which the services were received by them. It is also his submission that the decision of the Tribunal in the case of Polycab Industries 2010 (6) TMI 156 - CESTAT, AHMEDABAD will cover the issue in their favour. We are of the view that the issue involved in this case is debatable one, in as much as the appellant s availment of CENVAT Credit of the services rendered by sub-contractor at the site where there was no Central Excise registration obtained by the appellant for manufacturing of final product, is an arguable issue. The decision referred to by also does not give any detailed reasoning to come to a conclusion that the said decision will apply in the case in hand - stay granted partly.

Summary

Issues:
Waiver of Service Tax, interest, and penalty amounting to Rs.41,72,401/- due to in-eligible CENVAT Credit availed by the appellant.

Analysis:
The appellant filed a Stay Petition seeking waiver of Service Tax, interest, and penalty. The Tribunal considered the submissions and records. The liability arose as the appellant availed in-eligible CENVAT Credit of Service Tax paid by a sub-contractor. The appellant argued that they manufactured the final product for which services were received, citing a Tribunal decision in Polycab Industries. The Tribunal found the issue debatable, as the appellant availed CENVAT Credit at a site without Central Excise registration for final product manufacturing. The Tribunal noted the lack of detailed reasoning in the cited decision. Due to the need for deeper consideration, the appellant was directed to deposit Rs.10 lakhs within four weeks for further proceedings.

The Tribunal directed the appellant to comply with the deposit condition and report to the Deputy Registrar. Upon compliance, the application for waiver of the remaining balance was allowed, and recovery stayed until appeal disposal. The Tribunal emphasized the need for thorough consideration of the issue before making a final decision, indicating the complexity and arguable nature of the matter. The appellant was given a specific timeline for compliance and subsequent review by the Bench for further orders. The Tribunal's decision balanced the interests of the appellant and the tax authorities by requiring a partial deposit while granting a stay on recovery pending appeal resolution.