2014 (1) TMI 405 - AT - Service Tax

Appellant granted waiver for pre-deposit on ineligible Cenvat credit services. Stay on recovery pending appeal.

The Member allowed the appellant's stay petition, waiving the pre-deposit requirement for certain amounts related to ineligible Cenvat credit on services ... Cenvat credit - definition of input service - use in relation to business - ineligibility of Cenvat credit - waiver of pre-deposit and stay of recovery - interest on Cenvat credit under Rule 14 - penalty under Rule 15Definition of input service - use in relation to business - Cenvat credit - Whether Service Tax paid on Air fare/air tickets, taxi/car hiring, insurance charges, and maintenance and repair charges is eligible as Cenvat credit. - HELD THAT: - The Tribunal found that the services (air travel and taxi/car hiring, insurance charges, maintenance and repair charges) were availed for logistical and business purposes and, prima facie, fall within the services used in relation to the appellant's business. The lower authorities had held the credits ineligible on the ground that the services did not fit the definition of input service under the Cenvat Credit Rules, 2004, but did not address the appellant's specific plea that these services were for business purposes. The Tribunal accepted the appellant's contention that insurance was taken to protect stocks and assets located at various branches against fire, theft and other damages. The Tribunal also relied on the decision in Stanzen Toyotetsu India Pvt. Ltd. , where a two Member Bench held that insurance charges paid on services related to the business and Cenvat credit could not be disallowed, and treated that view as supporting the appellant's case. On this prima facie assessment, the Tribunal concluded that the appellant had made out a case for relief from pre-deposit.Cenvat credit of Service Tax paid on the specified services was prima facie held to be in relation to the business and not liable to be disallowed.Waiver of pre-deposit and stay of recovery - interest on Cenvat credit under Rule 14 - penalty under Rule 15 - Whether the requirement of pre-deposit of the confirmed demand, interest and penalty should be waived and recovery stayed pending appeal. - HELD THAT: - Applying the prima facie conclusion on eligibility, the Tribunal found that the appellant had made out a case for waiver of the pre-deposit requirement. In view of the Tribunal's view on the merits and the supporting precedent, it directed waiver of the pre-deposit of the demand of Cenvat credit, interest under Rule 14 and penalty under Rule 15, and ordered stay of recovery until disposal of the appeal.Application for waiver of pre-deposit of the Cenvat credit demand, interest and penalty was allowed and recovery stayed till disposal of the appeal.Final Conclusion: The Tribunal prima facie held the contested Service Tax credits to be in relation to the appellant's business and allowed waiver of the pre-deposit (including interest under Rule 14 and penalty under Rule 15), staying recovery of the amounts until the appeal is finally disposed of. Issues:1. Eligibility of Cenvat credit on specific services under Cenvat Credit Rules, 2004.Analysis:The case involved a stay petition seeking waiver of pre-deposit for certain amounts, including ineligible Cenvat credit, interest, and penalty under the Cenvat Credit Rules, 2004. The primary issue revolved around the ineligibility of Cenvat credit on services such as Insurance, Air Fare/Air Tickets, Taxi/Car Hiring, Insurance Charges, Maintenance, and Repair Charges. The lower authority had deemed the Service Tax paid on these services as ineligible, citing non-alignment with the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004.During the proceedings, the appellant's advocate argued that the services in question were utilized in relation to the appellant's business activities. The Departmental Representative, on the other hand, reiterated the findings of the Commissioner (Appeals) and highlighted a relevant case law. After considering the submissions from both sides, the Member found that the Cenvat credit on the services like Air Fares/Air Tickets, Taxi/Car Hiring, Insurance Charges, Maintenance, and Repair Charges was indeed related to the business operations of the appellant. The Member noted that the lower authorities had not adequately addressed the appellant's argument regarding the business purpose of these services.The Member referred to a precedent set by a two-Member Bench of the Tribunal in a similar case, where it was held that insurance charges paid on services are considered to be in relation to the business of the assessee, and therefore, the Cenvat credit of Service Tax paid on such services cannot be disallowed. Consequently, the Member concluded that the appellant had established a case for waiving the pre-deposit requirement for the amounts in question. The application for waiver of pre-deposit of Cenvat credit demand, interest, and penalty was allowed, and the recovery was stayed pending the appeal's disposal.