Stay petition granted for waiver of pre-deposit on Cenvat credit dispute

The stay petition for waiver of pre-deposit of the Cenvat credit amount confirmed for reversal of credit on Service Tax paid on Telephone Services, interest, and penalty under Rule 15(1) of Cenvat Credit Rules, 2004 was granted. The Adjudicating Authority found that the demand confirmation, penalty, and interest were based on the appellant availing Cenvat credit on 'Telephone Services' in line with Circular No. 97/8/2007. As the circular allowed the credit, the waiver of pre-deposit was approved, and recovery was stayed pending appeal disposal by the Member (J) of the Appellate Tribunal CESTAT, Bangalore.

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Issues: Stay petition for waiver of pre-deposit of Cenvat credit amount confirmed by authority for reversal of credit on Service Tax paid on Telephone Services, interest, and penalty under Rule 15(1) of Cenvat Credit Rules, 2004.

Analysis:
- The appellant filed a stay petition seeking waiver of pre-deposit of Rs. 1,93,739/- and Rs. 52,700/- confirmed for the reversal of Cenvat credit on Service Tax paid on Telephone Services, along with interest and penalty under Rule 15(1) of Cenvat Credit Rules, 2004.
- After hearing both sides and examining the records, it was found that the demand confirmation, penalty, and interest were based on the appellant availing Cenvat credit on 'Telephone Services' due to providing services of an Authorized Service Station.
- The Adjudicating Authority referenced Circular No. 97/8/2007, which clarified that credit of service tax paid in respect of mobile telephone service is admissible under the Cenvat Credit Rules, 2004, provided the mobile phone is used for providing output service or in relation to the manufacture of finished goods.
- Considering the circular, it was concluded that the Service Tax credit availed by the appellant cannot be denied, and the revenue cannot argue against its own circular. Therefore, a prima facie case for the waiver of pre-deposit of the amounts was established.
- Consequently, the application for the waiver of pre-deposit of the indicated amounts was allowed, and the recovery was stayed until the appeal's disposal. The decision was pronounced and dictated in open court by the Member (J) of the Appellate Tribunal CESTAT, Bangalore.

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