2014 (5) TMI 979 - AT - Central Excise

Waiver of pre deposit - Availment of Cenvat credit of service tax - Credit on the strength of invoices issued by the service provider - Held that - appellant instead of availing the credit after the payment of service tax paid by service provider, availed on payment of service tax, even before the payment of same by the service provider. The said availment was on the ground that appellant had paid the service tax to service provider for further depositing the same with the department. For such advance availment of service tax credit, the appellant has already paid the interest on the same - Stay granted.

Summary

Issues:
1. Availment of Cenvat credit of service tax based on invoices issued by a service provider who did not deposit the service tax.
2. Interpretation of Rule 9(1)(b) of Cenvat Credit Rules, 2004 regarding willful suppression and subsequent issuance of supplementary invoices.
3. Applicability of Rule 9(1)(bb) introduced with effect from 01.04.2011 in cases before that date.
4. Advance availment of service tax credit by the appellant before the actual payment by the service provider.

Analysis:
The judgment by Ms. Archana Wadhwa of the Appellate Tribunal CESTAT NEW DELHI addresses the dispute concerning the appellant's availing of Cenvat credit of service tax amounting to Rs. 10,74,468 based on invoices from a service provider who failed to pay the service tax. The service provider's tax liability was confirmed, and payment was made through invoices on 15.5.09, which the appellant credited on 21.5.09 for services received between 2005-2006 and 2008-2009.

The crux of the issue revolved around the contention that due to the service provider's willful suppression leading to the tax payment, the appellant should not be allowed to claim the Cenvat credit. This argument was based on the amendments to Rule 9(1)(b) of the Cenvat Credit Rules, 2004 effective from 1.4.2011. However, the appellant argued that since the period in question predates the amendment, they should be entitled to the credit despite the circumstances surrounding the service provider's tax payment.

The Tribunal's analysis referenced the case of Delphi Automotive Systems (P) Ltd. Vs. CCE, Noida, highlighting that Rule 9(1)(b) did not apply to situations involving non-payment due to deliberate suppression and subsequent issuance of supplementary invoices during the relevant period before 01.04.2011. As the appellant's case fell within this timeframe, the condition of pre-deposit of duties was waived.

Furthermore, the judgment noted that the appellant had availed the credit even before the service provider's payment, citing that the appellant had paid the service tax in advance to the provider for depositing with the department. This advance availment was supported by the appellant's payment of interest on the service tax.

Consequently, Ms. Archana Wadhwa dispensed with the pre-deposit condition of duty and penalty, unconditionally allowing the stay petition in favor of the appellant. The decision was pronounced in open court, providing clarity on the interpretation and application of relevant Cenvat credit rules in the given context.