2013 (11) TMI 611 - AT - Service Tax

Ineligible Cenvat credit on various services Waiver of Pre-deposit Held that - Relying upon Navaratna S.G. Highway Prop. Pvt. Limited vs. Commissioner of Service Tax, Ahmedabad 2012 (7) TMI 316 - CESTAT, AHMEDABAD - The definition of input service on which the credit can be availed is found at Rule 2 (l) of the Cenvat Credit Rules, 2004 - the definition specifically states, as to input services which are used by a manufacturer whether directly or indirectly, in or in relation to manufacturing of final products and includes services used in relation to setting up - the appellant has made out a prima facie strong case for the waiver of pre-deposit of the amounts involved - the waiver of pre-deposit of the amounts allowed till the disposal Stay granted.

Summary

Issues:
1. Waiver of pre-deposit of confirmed ineligible cenvat credit with interest and penalty.

Analysis:
The judgment pertains to a stay petition seeking the waiver of pre-deposit of approximately Rs. 4.62 Crores, confirmed as ineligible cenvat credit availed with interest and an equivalent amount of penalty. The adjudicating authority confirmed the amounts on the grounds that the appellant availed cenvat credit of service tax paid by service providers for setting up a plant for manufacturing final products on which Central Excise duty is discharged.

The learned counsel referred to the original order and the services on which service tax was paid and credit availed. Reference was made to precedents like Navaratna S.G. Highway Prop. Pvt. Limited and Gujarat State Petronet Limited. The Additional Commissioner argued that credit cannot be allowed for services rendered towards immovable property, such as erection of transmission towers, which are deemed ineligible.

Upon careful consideration and perusal of the records, the Tribunal examined the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004. The definition includes services used directly or indirectly in or in relation to manufacturing final products, as well as services used in relation to setting up a new plant. The Tribunal found that the appellant had availed services from providers who discharged service tax on such services for setting up a new plant. Consequently, the Tribunal held that the appellant had established a prima facie strong case for the waiver of pre-deposit. Therefore, the application for the waiver was allowed, and recovery of the amounts stayed pending the appeal's disposal.

The judgment was pronounced in court, granting the waiver of pre-deposit and staying the recovery of the amounts until the appeal is resolved.