2014 (1) TMI 451 - AT - Service Tax

Waiver of pre-deposit of Service Tax - MODVAT Credit of Service Tax - C & F agent services - Held that - as the applicant satisfies the condition of service, the benefit of the credit of Service Tax paid by C & F agent has to be extended to the assessee - Since this would be in relation to business, in addition to the activities relating to the manufacture, the appellants action of availing Cenvat credit on the service tax paid by the C&F Agency on such activities cannot be considered as irregular. Thus, the impugned orders are liable to be set aside - Following decision of RASHTRIYA ISPAT NIGAM LTD. Versus COMMR. OF C. EX., VISAKHAPATNAM 2010 (3) TMI 356 - CESTAT, BANGALORE - Stay granted.

Summary

Issues:
Prayer to dispense with pre-deposit of Service Tax demand and penalty based on admissibility of MODVAT Credit for C & F agent services.

Analysis:
The judgment pertains to an application seeking to waive the condition of pre-deposit of Service Tax demand and penalty amounting to Rs. 4,50,345, confirmed against the applicant-appellant for the period from December 2004 to February 2005. The lower authorities had denied MODVAT Credit for Service Tax paid on C & F agent services, stating that although it met the definition of input service under Rule 2(l) of CENVAT Credit Rules, 2004, the credit could not be allowed as the assessable value of such services did not contribute to the assessable value of the final product.

The Advocate for the Appellant referred to a Tribunal decision in the case of M/s. Rashtriya Ispat Nigam Ltd. v. CCE, Visakhaptnam, highlighting that a similar ground raised by the Revenue was rejected in that case. Citing the judgment of the Hon'ble Bombay High Court in the case of Coca Cola India Pvt. Ltd., it was argued that if the applicant satisfied the conditions of service, the credit for Service Tax paid by the C & F agent should be extended to the assessee. Another Tribunal decision in the case of M/s. Ineos ABS (India) Ltd. v. CCE, Vadodara was also relied upon to counter the Revenue's contention that Service Tax credit should only be available if it directly impacted the cost of production.

After considering the arguments presented, the Tribunal concurred that the issue at hand was akin to the precedents cited by the Appellant's Advocate. Consequently, the Tribunal decided to dispense with the pre-deposit condition of duty and penalty, thereby staying the recovery of the same. The early hearing application and stay petition were both disposed of in the manner outlined in the judgment.

This judgment showcases the significance of precedent decisions in shaping the outcome of similar cases and emphasizes the need for consistency in interpreting legal provisions related to tax credits and liabilities.