2014 (3) TMI 515 - AT - Central Excise

Waiver of pre deposit - Cenvat Credit of service tax paid on input services where invoices were addressed to Head office - Duty paying documents - Held that - appellant seems to have prima facie case in respect of some of the input services which, by the very nature thereof, were linked only to the factory. These services include technical inspection & testing services and consulting engineer s service. In relation to other services, prima facie, the factory cannot claim exclusive coverage inasmuch as such services could be used by the Head Office also viz. audit services, security services, manpower recruitment & supply services etc. - Conditional stay granted.

Summary

Issues:
1. Denial of CENVAT credit on input services due to address discrepancy.
2. Plea of limitation against the impugned demand.
3. Claim of input services being equally related to factory and Head Office.
4. Prima facie case for some input services being linked only to the factory.
5. Direction for predeposit and waiver/stay of penalty and balance amount.

Analysis:
1. The appellant sought waiver and stay for adjudged dues, including service tax and education cesses. CENVAT credit on input services was denied due to invoices being addressed to the Head Office instead of the factory. The appellant argued that the services were used in manufacturing and qualified as input services, contesting the denial.

2. The appellant raised a plea of limitation against the demand, stating that penalty under Rule 15(2) was dropped, and invoking Rule 14 with the proviso to Section 11A(1) was unjustified. The authorities were criticized for invoking a larger period of limitation despite similar grounds for penalty under Rule 15(2).

3. The appellant did not prove that all input services were received in the factory, leading to a confirmation of demand by the original authority. Some services were deemed equally related to the factory and Head Office, such as security and telephone services. The appellant was directed to predeposit Rs.1 lakh within six weeks for compliance.

4. On merit assessment, some input services were deemed linked only to the factory, like technical inspection and consulting engineer services. However, services like audit, security, and manpower recruitment could be utilized by both the factory and Head Office. The appellant was granted waiver and stay of penalty upon compliance with the predeposit directive.

5. The judgment concluded with a direction for predeposit and subsequent waiver/stay of penalty and the remaining CENVAT credit and interest. The appellant was instructed to report compliance to the Deputy Registrar within a specified timeframe, subject to which the waiver and stay would be implemented.