CENVAT credit entitlement under Rule 6(5) sustained where taxable and exempted services coexisted and no contrary case was shown.

Prima facie entitlement to CENVAT credit under Rule 6(5) of the CENVAT Credit Rules, 2004 was accepted where both taxable and exempted services were being provided and the services were not shown to be used exclusively for exempted goods or exempted services. The department did not advance any contrary ground to depart from the stay-stage view, so the impugned order was set aside and relief was granted to the appellant. The result was complete relief against the demand of service tax, interest and penalty.

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Issues: Whether the appellant was entitled to relief in respect of the demand of service tax, interest and penalty in the light of the prima facie applicability of Rule 6(5) of the CENVAT Credit Rules, 2004.

Analysis: The recorded stay order had found a strong prima facie case for waiver of pre-deposit, noting that credit of service tax on taxable services is available unless the services are used exclusively in or in relation to the manufacture of exempted goods or the provision of exempted services. It was noticed that both taxable and exempted services were being provided and that the department had not advanced any ground requiring a different view from the one taken at the stay stage.

Conclusion: The earlier prima facie view was confirmed, the impugned order was set aside, and relief was granted to the appellant.

Final Conclusion: The appeal succeeded and the assessee obtained complete relief against the impugned order.

Ratio Decidendi: Where the record discloses a strong prima facie entitlement to CENVAT credit under the applicable rule and no contrary case is made out by the department, the adverse order cannot be sustained.

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