2013 (11) TMI 349 - AT - Service Tax

CENVAT credit - services of erection commissioning and installation services being provided by the sub-contractors - Waiver of pre deposit - Held that - It is undisputed that the appellant is a manufacturer of Diesel Generating Sets and is also undertaking erection, installation and maintenance services of the said DG sets as and when requested by the client. It is also undisputed that the appellant is not rendering the services of erection, installation and maintenance of all the DG sets manufactured and sold by them. It is also undisputed that the appellant is hiring sub-contractors for doing the basic work at the site for such erection, installation of the DG sets and the said sub-contractor, after completing the services at the site, raises the bill on the appellant by paying Service Tax on the said amount. The appellant takes the credit of this Service Tax and raises further bill on the purchaser of the DG sets for the services of erection, installation, commissioning etc - Appellant is availing the services of the sub-contractor for providing an output service on which he is discharging the Service Tax liability under the head Erection, Installation and Commissioning services. In our view, the appellant has made out a case for waiver of pre-deposit of the amounts involved - stay granted.

Summary

Issues:
Waiver of pre-deposit of service tax, CENVAT credit, interest, penalty under Finance Act, 1994, penalty under CENVAT Credit Rules, 2004.

Analysis:

The appellant filed a Stay Petition seeking waiver of pre-deposit of service tax, CENVAT credit, interest, and penalties amounting to significant sums. The adjudicating authority confirmed these amounts due to the appellant's alleged availing of ineligible CENVAT credit of Service Tax paid by a sub-contractor and utilizing it for discharging Service Tax liability. The appellant was directed to reverse the CENVAT credit and pay the Service Tax output services by debiting the same amount in CENVAT Credit.

Upon hearing both sides and examining the records, it was established that the appellant, a manufacturer of Diesel Generating Sets, also provided erection, installation, and maintenance services upon client request. The appellant engaged sub-contractors for the basic work at the site, with the sub-contractor billing the appellant for the services rendered, including Service Tax. The appellant then credited this Service Tax and invoiced the purchaser of the DG sets for the services provided.

The Revenue contended that the appellant was not the provider of the output services for which input services were received. However, the Tribunal found that the appellant availed the sub-contractor's services to provide an output service, discharging the Service Tax liability under Erection, Installation, and Commissioning services. Consequently, the Tribunal granted the waiver of pre-deposit for the amounts involved, staying the recovery until the appeal's final disposal. The matter was directed to be listed with earlier cases on the same issue for further proceedings.