Tribunal waives penalty due to input credit confusion, grants Cenvat credit for essential services.

The tribunal waived the penalty imposed on the appellant for confusion in input credit application, as there was no deliberate evasion. Cenvat credit was granted for service tax paid on erection and commissioning services essential for manufacturing. Additionally, Cenvat credit was allowed for services of a contractor clearing jungle for vehicle parking, deemed necessary for manufacturing activities. The appeal was partially allowed based on these findings.

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Issues:
1. Applicability of penalty for confusion in input credit application.
2. Denial of Cenvat credit on service tax paid for erection and commissioning services.
3. Disallowance of Cenvat credit for services of a contractor for clearing jungle for vehicle parking.

Analysis:
1. The appellant claimed input credit on service tax paid for hall rent and hiring of a meeting place in a hotel, citing confusion in the application of the law. The appellant later reversed the credit upon realizing its inadmissibility. The tribunal found that there was no deliberate evasion by the appellant, and therefore, the levy of penalty was deemed unwarranted and waived.

2. The appellant contended that the service tax paid on erection and commissioning services for a water treatment plant should be available as Cenvat credit. The revenue opposed this claim, but the tribunal held that since the services were essential for recycling water for manufacturing, the denial of Cenvat credit was unjustified. Consequently, the appellant was granted the Cenvat credit for these services.

3. Regarding the denial of Cenvat credit for services of a contractor clearing jungle for vehicle parking, the authority had questioned the necessity of such parking space. However, the tribunal noted that the area could be used for parking vehicles used in manufacturing activities, making the denial of Cenvat credit inconceivable. As a result, the appellant was granted relief on this count as well. The appeal was allowed in part based on the above considerations.

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