Appellate Tribunal grants waiver of pre-deposit for service tax credit dispute

The Appellate Tribunal CESTAT AHMEDABAD, under the judgment of Mr. M.V. Ravindran, granted the appellant's stay petition seeking waiver of pre-deposit of penalty and interest imposed for availing cenvat credit of service tax paid before the permissible date. The appellant had reversed the disputed credit amount and continued to challenge the issue, leading to the Tribunal deeming the reversed amount as sufficient deposit to proceed with the appeal. The application for waiving the remaining pre-deposit amounts was granted, and recovery was stayed pending final disposal of the appeal.

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Issues:
- Eligibility to avail cenvat credit of proportionate service tax after 10.09.04 by a manufacturer on an invoice of service tax provider issued prior to 10.09.04.

Analysis:
The judgment delivered by Mr. M.V. Ravindran at the Appellate Tribunal CESTAT AHMEDABAD pertains to a stay petition filed by the appellant seeking the waiver of pre-deposit of penalty and interest imposed by lower authorities. The appellant, a manufacturer, had availed cenvat credit of service tax paid by insurance companies. The contention put forth was that the appellant was permitted to avail such credit from 10.09.04 onwards. However, upon audit, it was discovered that the appellant had claimed credit for service tax paid before the permissible date based on invoices predating the eligibility period. The appellant argued that they had only availed the proportionate credit of service tax paid or payable on documents issued after 10.09.04. The appellant had already reversed the entire amount of credit and was challenging the issue on its merits.

Upon reviewing the submissions made by the ld. D.R. and examining the records, Mr. M.V. Ravindran found that the crux of the matter revolved around the eligibility of a manufacturer to claim cenvat credit for proportionate service tax post 10.09.04 on invoices issued by service tax providers before the specified date. Acknowledging the debatable nature of the issue and considering that the appellant had already reversed the credit amount in question while continuing to contest the matter on its substantive grounds, it was deemed that the reversed amount sufficed as a deposit to proceed with the appeal. Consequently, the application for waiving the pre-deposit of the remaining amounts was granted, and any recovery was stayed pending the final disposal of the appeal. The judgment was dictated and pronounced in the court by the presiding officer.

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