Waiver of pre-deposit granted for Cenvat Credit eligibility on service tax for township construction

The Tribunal allowed the waiver of pre-deposit for the appellant in a case concerning the eligibility of Cenvat Credit on service tax paid for services used in constructing and maintaining a township within factory premises. Despite conflicting High Court judgments, the Tribunal considered the appellant's financial hardship and the debatable nature of the issue. The appellant was granted relief as a substantial amount had already been deposited, with recovery of the remaining balance stayed pending appeal disposal.

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Issues: Stay petitions for waiver of pre-deposit of Cenvat Credit, Penalty, and Interest; Eligibility of Cenvat Credit on service tax paid on services used in construction and maintenance of township within factory premises; Interpretation of conflicting High Court judgments; Financial hardship faced by the appellant.

The judgment addresses stay petitions filed by the appellant seeking waiver of pre-deposit of amounts related to Cenvat Credit, Penalty, and Interest. The Adjudicating Authority had confirmed demands citing the appellant's availing of ineligible Cenvat Credit on service tax paid for services used in constructing and maintaining a township within the factory premises. The appellant argued that including the township cost in the product's production cost was in line with cost accounting standards. They referred to conflicting High Court judgments, with one supporting their stance and another ruling against it. The appellant highlighted severe financial hardship due to a significant deposit already made. The Departmental Representative contended that service tax on services used in a residential colony might not be eligible for Cenvat Credit based on functional utility and relevant considerations. They referenced other judgments emphasizing mandatory services for credit eligibility. The appellant also cited a CBEC circular supporting their position that goods used in the factory premises should qualify for duty credit. The Tribunal noted the debatable nature of the issue, with different High Courts holding contrasting views on similar matters. They acknowledged the appellant's argument about the residential complex being within the factory premises, a point not previously raised in other judicial forums. Considering the conflicting views and the appellant's financial situation, the Tribunal allowed the waiver of pre-deposit for the remaining balance, as a substantial amount had already been deposited, amounting to approximately 25% of the confirmed demand. The recovery of the balance amounts was stayed pending the appeal's disposal.

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