Tribunal waives pre-deposit for disallowed cenvat credit on input services, emphasizing nexus & stay pending appeal.

The Tribunal granted a waiver of pre-deposit for the dues arising from the disallowed cenvat credit on input services, citing lack of nexus with manufacturing activity and emphasizing the need for a different standard to establish nexus for intangible services compared to tangible inputs. The Tribunal noted that objections raised by the Revenue were not the substantive issues in the show cause notice and ordered a stay on the collection of dues pending appeal. The Tribunal distinguished past judgments on inputs, not input services, and highlighted doubts on their applicability to the case.

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Issues: Availment of cenvat credit on input services, nexus of input services with manufacturing activity, applicability of past judgments, pre-deposit requirement for appeal.

Analysis:
1. The applicant, a manufacturer of excisable goods, availed cenvat credit on various input services for a specific period. Two show cause notices were issued, alleging that the services were not used in relation to the manufacture of the final product. The Commissioner disallowed the credit, stating lack of nexus with manufacturing activity and uncertainty regarding service allocation to the specific unit where credit was utilized.

2. In response, the applicant argued that the demand was confirmed on different grounds than proposed in the show cause notice. They contended that during the relevant period, there was no restriction on assigning or transferring services to a specific factory for duty payment on final products. The applicant emphasized that there was no distribution but only transfer, hence not requiring registration as an input service distributor.

3. The Revenue opposed the appeal, asserting that the impugned services lacked nexus with manufacturing activity, and credit was not received at the factory where utilized. The Revenue relied on past judgments such as Maruti Suzuki Ltd. v. CCE Delhi, CCE Nagpur v. Manikargh Cement, and CCE Chennai v. Sundaram Brake Linings to support their argument.

4. Upon considering both sides, the Tribunal noted that the Maruti Suzuki Ltd. case pertained to inputs, not input services. Additionally, the Tribunal highlighted doubts raised by another Bench of the Supreme Court regarding the applicability of the Maruti Suzuki Ltd. decision to input services. The Tribunal also emphasized that services, being intangible, required a different standard to establish nexus compared to tangible inputs.

5. The Tribunal found that the objections raised by the Revenue regarding the factory taking credit based on invoices addressed to the company's headquarters were not the substantive issues raised in the show cause notice. Consequently, the Tribunal granted a waiver of pre-deposit for the dues arising from the impugned order and ordered a stay on the collection of such dues during the pendency of the appeals.

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