Appellate Tribunal grants waiver for service tax on manufacturing exempted goods

The Appellate Tribunal CESTAT, CHENNAI, granted the waiver of pre-deposit for service tax on manufacturing exempted goods and invoices not in the plant's name. The Tribunal dismissed the Revenue's reliance on a rule not cited in the Show Cause Notice and overlooked the invoicing discrepancy, deeming it a procedural lapse that does not impact the waiver. The waiver was granted based on the direct relation of the service to the manufacturing process, with recovery stayed during the appeal process.

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Issues: Application for waiver of pre-deposit of service tax for manufacturing exempted goods and invoices not in the name of the plant.

1. Waiver of Pre-deposit for Manufacturing Exempted Goods:
The judgment addresses the application for waiver of pre-deposit of service tax amounting to Rs. 4,34,411/- confirmed for being used in the manufacture of exempted goods, specifically "Bio-compost fertilizer." The Tribunal acknowledges the submissions made, highlighting that the waste generated during the manufacturing process of "Denatured Ethyl Alcohol" decomposes into Biogas, subsequently utilized in the production of Bio-compost fertilizer. Despite the exempted status of the final product, the Tribunal notes that the service in question is directly related to the business of manufacturing the assessee's primary product, Denatured Ethyl Alcohol. The Tribunal dismisses the Revenue's reliance on Rule 6(1) of the Cenvat Credit Rules, 2004, emphasizing that the ground was not part of the initial Show Cause Notice. Consequently, the Tribunal grants the waiver of pre-deposit, citing the procedural lapse as a reason for not denying the credit.

2. Invoices Not in the Name of the Plant:
The second issue pertains to the invoices being in the name of the Head Office rather than the plant. The Tribunal deems this discrepancy as a procedural lapse, indicating that such an error does not warrant the denial of credit. Despite the oversight in the invoicing process, the Tribunal finds that it does not impact the eligibility for the waiver of pre-deposit. As a result, the Tribunal grants the waiver of the disputed amounts and orders the stay of recovery during the pendency of the appeal.

In conclusion, the judgment by the Appellate Tribunal CESTAT, CHENNAI, delivered by Ms. Jyoti Balasundaram, addresses the issues of waiver of pre-deposit concerning service tax for manufacturing exempted goods and the discrepancy in invoices not being in the name of the plant. The Tribunal grants the waiver based on the direct relation of the service to the manufacturing process, dismissing the Revenue's reliance on a rule not mentioned in the Show Cause Notice. Additionally, the Tribunal overlooks the procedural lapse regarding the invoicing discrepancy, emphasizing that it does not affect the grant of the waiver.

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