Abatement under service tax notification and reversal of CENVAT credit supported interim waiver of pre-deposit.

Under Notification No. 1/2006-ST, abatement was claimed to remain available despite the allegation that CENVAT credit had been availed, because earlier decisions had accepted that reversal of such credit, even at a later stage, could preserve the exemption benefit. On that reasoning, the Tribunal found a prima facie case for interim relief and granted waiver of pre-deposit in full, with stay of further proceedings pending disposal of the appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of further proceedings notwithstanding the allegation that cenvat credit had been availed, in the context of Notification No. 1/2006-ST.

Analysis: The Tribunal noted that the appellant's claim was that the benefit of abatement under the notification was denied only because cenvat credit had been availed. It also noted that earlier decisions had recognised that where such credit is reversed, even subsequently, the exemption or abatement benefit may still be available. On that basis, the Tribunal found a prima facie case in favour of the appellant for interim relief.

Conclusion: The appellant was granted waiver of pre-deposit in full and stay of further proceedings pending disposal of the appeal.

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