2012 (11) TMI 167 - AT - Service Tax

Waiver of Service Tax Pre-Deposit Granted on Compliance with Notification

The Tribunal allowed the appellant's application for waiver of pre-deposit of service tax amounts and penalties under Sections 77 and 78. The recovery was ... Benefit of exemption under Notification No. 8/2005-S.T. to job workers - conditions for availing notification - supply of raw materials by principal and production of certificates evidencing discharge of excise duty - pre-deposit waiver and stay of recovery pending disposal of appealBenefit of exemption under Notification No. 8/2005-S.T. to job workers - conditions for availing notification - supply of raw materials by principal and production of certificates evidencing discharge of excise duty - Whether the appellant prima facie complied with the conditions of Notification No. 8/2005-S.T., 1-3-2005, so as to negate the confirmed service tax and penalties for job work. - HELD THAT: - The Tribunal examined the record and found that the appellant had produced certificates issued by principal manufacturers indicating discharge of excise duty on products returned after job work. The record also showed that powder purchased by the appellant for coating was billed to the principal manufacturers when raising job work bills. On this prima facie view, the appellant satisfied the material conditions of the Notification which requires that raw materials/products and duty discharge be attributable to the principal manufacturer. Although the adjudicating authority noted that certificates were produced in respect of only nine out of forty eight principal manufacturers, the Tribunal confined itself to a prima facie appraisal for the limited purpose of grant of interim relief and concluded that the appellant had made out sufficient case for benefit of the Notification at this stage. [Paras 6, 7]On prima facie satisfaction that conditions of Notification No. 8/2005-S.T. were complied with, the Tribunal treated the appellant as entitled to interim relief.Pre-deposit waiver and stay of recovery pending disposal of appeal - Whether the pre-deposit of the confirmed amounts should be waived and recovery stayed pending adjudication of the appeal. - HELD THAT: - Applying the prima facie conclusion that the appellant complied with the Notification's conditions, the Tribunal exercised its discretion to grant interim relief. The Tribunal found it appropriate to waive the pre-deposit and stay recovery of the confirmed service tax, interest and penalties until the appeal is finally decided, thereby preserving the appellant's position pending final adjudication. [Paras 7]Application for waiver of pre-deposit granted and recovery stayed until disposal of the appeal.Final Conclusion: The Tribunal allowed the stay petitions, holding on a prima facie view that the appellant complied with the conditions of Notification No. 8/2005-S.T., and granted waiver of pre-deposit with a stay on recovery of the disputed amounts until disposal of the appeal. Issues:Waiver of pre-deposit of service tax, penalties under Sections 77 and 78, compliance with Notification No. 8/2005-S.T.Analysis:The case involved two stay petitions seeking the waiver of pre-deposit of service tax amounts, penalties under Sections 77 and 78. The adjudicating authority confirmed the amounts as service tax liability, interest, and penalties due to the alleged non-discharge of service tax liability on job works, a violation of Notification No. 8/2005-S.T. The appellant argued that they had produced certificates from principal manufacturers showing discharge of duty liability, which the adjudicating authority allegedly did not consider properly. The appellant's compliance with the conditions of the Notification was questioned by the SDR, emphasizing the need to obtain raw materials from the principal manufacturer to benefit from the Notification. The SDR also highlighted the lack of certificates from all manufacturers for whom the appellant had done powder coating work.Upon careful consideration, the issue revolved around the appellant's entitlement to the benefits of Notification No. 8/2005-S.T. for the discharge of service tax liability as a job worker. The appellant had presented certificates from principal manufacturers indicating the discharge of excise duty liability on products received from them. It was noted that the appellant had purchased powder for coating but billed such purchases to principal manufacturers, suggesting compliance with the Notification's conditions. Consequently, the Tribunal found that the appellant had prima facie met the Notification's requirements.In conclusion, the Tribunal allowed the application for the waiver of pre-deposit of the amounts involved and stayed the recovery until the appeal's disposal. The decision was dictated and pronounced in court.