Tribunal: Cenvat credit on banking services allowed based on service receipt date, waiver of pre-deposit granted

The Tribunal held that the applicant could avail Cenvat credit on banking and financial services based on rules in force at the time of service receipt, not at the credit availing date. Relying on a Circular, it granted a waiver of pre-deposit and ordered a stay on the collection of dues during the appeal process.

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Issues:
1. Availing Cenvat credit on input services for banking and financial services.
2. Interpretation of Rule 6(5) and Rule 6(3A) of Cenvat Credit Rules, 2004.
3. Applicability of rules in force at the time of service receipt versus credit availing date.

Analysis:
1. The applicant, a manufacturer of excisable products, availed Cenvat credit on service tax paid for banking and financial services between 01-04-09 to 31-03-11, with the credit taken in September 2011. A show cause notice was issued by the Revenue, contending that post the deletion of Rule 6(5) from 01-04-2011, only proportionate credit for dutiable goods under Rule 6(3A) could be availed. A demand of Rs.88,84,632/- out of the total credit was confirmed, leading to an appeal by the applicant.

2. The crux of the argument lies in the interpretation of the Cenvat Credit Rules, specifically Rule 6(5) and Rule 6(3A). The applicant's advocate asserts that eligibility for credit should be determined based on the rules in force at the time of service receipt, not at the time of credit availing. He relies on a CBEC circular to support the claim that credit cannot be denied based on new rules. Conversely, the Revenue argues that the rules applicable at the time of credit availing should dictate eligibility, citing a different CBEC clarification regarding rent-a-cab services.

3. The Tribunal, after considering both sides' submissions, relies on the principles outlined in the Circular dated 29-04-2011. It concludes that these principles apply equally to situations where total credit was available pre-01-04-2011, but only partial credit post that date. Consequently, the Tribunal grants a waiver of pre-deposit for the dues arising from the impugned order for appeal admission. Additionally, a stay on the collection of such dues during the appeal's pendency is ordered, ensuring a fair process for the applicant.

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