2014 (4) TMI 575 - AT - Central Excise

Waiver of predeposit of CENVAT credit - Credit was denied on the ground that it was taken on the basis of debit notes - Held that - it is not clear why the input service provider has issued debit note only in respect of this particular appellant and invoices to others. We find from the Adjudication order that there is factual dispute in this case in so far as CHA issued invoices directly to the applicant for input service. But, in some other services rendered by the third party, CHA issued debit notes. Hence, the applicant has failed to make out a prima facie case for waiver of predeposit of entire amount of credit and penalty - Conditional stay granted.

Summary

Issues: Application for waiver of predeposit of CENVAT credit, denial of credit based on debit notes, eligibility for service tax on CHA services, factual dispute regarding invoices and debit notes, directive for pre-deposit and waiver of balance amount.

The judgment pertains to an application for waiver of predeposit of CENVAT credit of Rs.5,64,314/- and penalty of equal amount along with interest. The credit was denied as it was taken based on debit notes. The applicant argued that they were eligible for service tax paid on CHA services, citing a favorable observation by the Commissioner (Appeals) and a precedent where the Tribunal dismissed a similar appeal. However, the Revenue relied on a different Tribunal decision and raised concerns about the issuance of debit notes only to the applicant by the input service provider. The Tribunal noted a factual dispute where CHA issued invoices directly to the applicant for some services but issued debit notes for others. Consequently, the applicant failed to establish a prima facie case for the waiver of the entire amount of credit and penalty. The Tribunal directed the applicant to pre-deposit Rs.1,00,000 within 6 weeks, following which the balance amount of credit, interest, and penalty would be waived, with recovery stayed pending the appeal. A compliance report was scheduled for a specific date.

The judgment highlights the importance of substantiating claims for waiver of predeposit with a strong prima facie case, especially in the presence of factual disputes regarding invoicing practices. It underscores the need for consistency and clarity in documenting transactions to support credit claims effectively. The decision also showcases the Tribunal's role in balancing the interests of the appellant and the Revenue while ensuring fair treatment and due process in tax matters.