Tribunal grants waiver of pre-deposit for dues during appeal, allowing CENVAT credit on input services used in hotel construction.

The tribunal allowed the applicant's appeal, granting waiver of pre-deposit for dues and staying collection during the appeal. It held that CENVAT credit on input services used in constructing a hotel was permissible, even if no output service was provided at the time of taking the credit. The tribunal interpreted the term "used" broadly, allowing for credit in cases where an immovable property was created between input and output services. This decision aligned with legal precedents establishing the nexus between input and output services.

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Issues:
1. Denial of CENVAT credit on input services used in construction activity.
2. Interpretation of the definition of input services under Rule 2(l) of the CENVAT Credit Rules, 2004.
3. Nexus between input services and output services.
4. Applicability of CENVAT credit for constructing an immovable property.
5. Appeal for waiver of pre-deposit of dues.

Analysis:
1. The applicant constructed a hotel and claimed CENVAT credit on input services used in the construction. The Revenue contended that since no output service was provided when the credit was taken, it was not allowable. A show-cause notice was issued, resulting in a confirmed amount against the applicant. The applicant appealed to the tribunal seeking waiver of pre-deposit for admission of the appeal.

2. The applicant argued that they were registered for service tax on various services and took credit for setting up facilities to provide output services like catering, mandap keeping, etc. The definition of input services at Rule 2(l) covered services for setting up premises of output service providers. The counsel urged that the appeal should be admitted without pre-deposit.

3. The Revenue opposed, stating that the definition required services to be "used" by a provider for providing output services, not merely intended for use. As no output service was provided when the credit was taken, the order was deemed legal. The argument emphasized that credit should be for taxable output services, not for immovable property like a hotel.

4. The tribunal analyzed the term "used" in the definition of input services, capital goods, and inputs. It clarified that "used" was a past participle, not strictly past tense, allowing for a broader interpretation. Referring to precedents, the tribunal noted that input services could be allowed even when an immovable property was created between input and output services.

5. Citing relevant case laws, the tribunal decided to waive the pre-deposit requirement for the appeal and ordered a stay on the collection of dues during the appeal's pendency. This decision was based on the interpretation of the term "used" in the context of input services and the nexus between input and output services established by legal precedents.

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