2014 (6) TMI 691 - AT - Service Tax

CESTAT allows Cenvat credit for post-sale services - Pre-deposit waived during appeal process

The Appellate Tribunal CESTAT NEW DELHI ruled in favor of the appellant, allowing Cenvat credit for post-sale services provided through authorized service ... Cenvat credit - post-sale service contractual obligation - service tax paid by service centres - waiver of pre-deposit during pendency of appeal - balance of convenience - prima facie caseWaiver of pre-deposit during pendency of appeal - balance of convenience - prima facie case - Pre-deposit requirement was waived during the pendency of the appeal. - HELD THAT: - The Tribunal observed that the appellant's contractual obligation to provide post-sale service through authorised service stations, discharged by those stations and already subjected to service tax, did not lend itself to an immediate conclusion that Cenvat credit must be denied. Noting that it did not 'appeal to commonsense' to treat the post-sale service obligation as a disintegrated activity, the Tribunal found that a prima facie case and the balance of convenience lay in favour of the appellant. On that basis the Tribunal directed waiver of the pre-deposit while the appeal remained pending. [Paras 2]Pre-deposit waived during pendency of the appeal.Cenvat credit - post-sale service contractual obligation - service tax paid by service centres - Whether the appellant was entitled to Cenvat credit in respect of post-sale service provided through authorised service stations was not finally adjudicated and remains for further consideration in the appeal. - HELD THAT: - The Tribunal recorded the factual position that the service centres had discharged the contractual post-sale service obligation and had suffered service tax on the cost of such services, and that the Revenue had denied the appellant's claim to take Cenvat credit of that tax. The Tribunal did not decide the substantive question on the merits; instead it found a prima facie view favourable to the appellant sufficient to justify waiver of pre-deposit, leaving the ultimate adjudication of entitlement to Cenvat credit to be determined in the course of the appeal.Substantive issue of entitlement to Cenvat credit not finally decided and remains to be adjudicated in the appeal.Final Conclusion: The Tribunal granted waiver of the pre-deposit during the pendency of the appeal having found a prima facie case and balance of convenience in favour of the appellant; the substantive question of entitlement to Cenvat credit in respect of post-sale services provided through authorised service stations was not finally decided and remains for determination on merits in the appeal. The Appellate Tribunal CESTAT NEW DELHI ruled in favor of the appellant regarding the denial of Cenvat credit for post sale service provided through authorized service stations. The tribunal found that the post service obligation was not a disintegrated activity, and there was a balance of convenience in favor of the appellant. Pre-deposit was waived during the appeal.