2014 (1) TMI 722 - AT - Service Tax

Waiver of pre-deposit of CENVAT Credit - Held that - inputs and capital goods that have been claimed to be used in or in relation to the provision of services made by the applicant we find that prima facie, the services received and utilized in providing output services, fall under the category of input services and CENVAT Credit would be available. However, admissibility of CENVAT Credit on inputs viz. bars, rods, cements, etc. and other capital goods used in the construction of building, which was ultimately given on rent, prima facie, not admissible to CENVAT Credit for providing services of renting of immovable property - Prima facie case not in favour of assessee - Stay granted partly.

Summary

Issues: Application for waiver of pre-deposit of CENVAT Credit and penalty under Rule 15 of CENVAT Credit Rules, 2004.

Analysis:
1. The appellant sought a waiver of pre-deposit of CENVAT Credit amounting to Rs.3,22,42,670/- along with an equal penalty imposed under Rule 15 of CENVAT Credit Rules, 2004. The appellant, engaged in providing services falling under Service Tax, availed CENVAT Credit on various input services, inputs, and capital goods used in construction. The appellant's financial condition was presented, showing a significant loss incurred. The appellant offered to deposit Rs.40,00,000/- pending appeal.

2. The Additional Commissioner supported the findings of the Commissioner regarding the appellant's financial loss. The Tribunal analyzed the nature of input services, inputs, and capital goods claimed to be used in providing services. While CENVAT Credit for input services utilized in output services was deemed admissible, the Credit on inputs like bars, rods, cements, and capital goods used in constructing buildings for renting immovable property was considered prima facie inadmissible. Considering the Revenue's interest and the appellant's financial hardship, the Tribunal accepted the appellant's offer of deposit and directed them to pay Rs.40,00,000/- within eight weeks. Upon compliance, the remaining dues would be waived, and recovery stayed during the appeal's pendency.

This judgment highlights the Tribunal's balanced approach in considering the admissibility of CENVAT Credit based on the nature of services provided and the financial circumstances of the appellant. The decision to accept the partial deposit offer while waiving the remaining dues demonstrates a fair consideration of both the Revenue's interests and the appellant's financial challenges.