2013 (11) TMI 51 - AT - Service Tax

Eligibility for Cenvat credit - Pandal and shamiyana services - Waiver of Pre-deposit Whether the appellants are eligible for the Cenvat Credit of service tax paid by them in respect of service tax paid by them in respect of Pandal & Shamiyana Services Held that - From the invoices submitted by the appellant that it is not clear whether Pandal & Shamiyana Services were used within the factory or elsewhere - Prima facie, there is no case for the complete waiver of pre-deposit - the appellant directed to deposit Rs. 1 lakh as pre-deposit upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues involved:
1. Eligibility of the appellant for Cenvat Credit of service tax paid on Pandal & Shamiyana Services used during the factory setup period.

Analysis:
The judgment pertains to a stay application filed by M/s Dalmia Chini Mills Ltd. seeking waiver of pre-deposit and stay of recovery against duty amounting to Rs. 2,62,871/- along with an equal amount of penalty imposed by the original authority and confirmed by the Commissioner (Appeal). The main issue in this appeal is whether the appellants are entitled to the Cenvat Credit of service tax paid on Pandal & Shamiyana Services used for protecting their goods/machinery during the initial period of setting up the factory. The Revenue has denied the Cenvat Credit, arguing that these services do not qualify as input services used in the manufacture of the final product.

During the hearing, both sides presented their arguments. The Revenue contended that the Pandal & Shamiyana Services were not utilized in the manufacturing process of the final product. Conversely, the appellant argued that these services were essential for storing goods/machinery and ensuring their protection during the initial phase. The tribunal noted that based on the invoices submitted by the appellant, it was unclear whether the Pandal & Shamiyana Services were utilized within the factory premises or elsewhere. The tribunal observed that there was no clear evidence to support a complete waiver of pre-deposit, despite the appellant's claim that such an allegation was not present in the Show Cause Notice.

Consequently, the tribunal directed the appellant to deposit Rs. 1 lakh within six weeks from the date of the order. Upon compliance with this directive, there would be a stay against the recovery of the remaining dues until the appeal's final disposal. The compliance was required to be reported by a specified date, as mentioned in the order.