Tribunal grants waiver of service tax pre-deposit based on CENVAT credit entitlement

The Tribunal granted the application for waiver of pre-deposit of service tax, interest, and penalty amounting to &8377;34,37,403/-, based on the applicants' entitlement to CENVAT credit on service tax paid for warehousing services abroad. Relying on a Board Circular, the Tribunal found the applicants prima facie eligible for the credit, leading to the waiver of pre-deposit and stay on recovery during the appeal process. The decision favored the applicant, with the Tribunal allowing the stay application, providing a clear resolution to the dispute.

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Issues:
Application for waiver of pre-deposit of service tax based on CENVAT credit denial.

Analysis:
The case involved an application for waiver of pre-deposit of service tax amounting to &8377;34,37,403/-, interest, and penalty. The demand was contested on the grounds that the applicants were denied CENVAT credit on service tax paid for warehousing services outside India for goods sold abroad, citing Section 66A of the Finance Act. The applicant relied on a Board Circular dated 27-6-2008 to support their claim, which clarified the treatment of service tax paid under Section 66A as "input credit" under the CENVAT Credit Rules, 2004, if the services were used as input services by the manufacturer or provider of output taxable service. The Tribunal found that based on the circular, the applicants were prima facie entitled to the CENVAT credit on the service tax paid. Consequently, the pre-deposit of dues was waived, and the recovery was stayed during the appeal process. The Tribunal allowed the stay application, indicating a favorable decision for the applicant. The judgment was pronounced in open court, providing a clear resolution to the issue at hand.

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