Pre-deposit in service tax dispute required where prima facie revenue prejudice appeared on cenvat credit and reconciliation issues.

In an appeal against service tax demand and disallowance of cenvat credit, the Tribunal considered whether the appellant was entitled to waiver of pre-deposit and stay of recovery. The dispute concerned credit on finished goods received back from a job worker and an additional demand based on reconciliation of receipts and receivables. On the material placed, the Tribunal found that prejudice to the Revenue was apparent and that pre-deposit was warranted. The appellant was directed to deposit Rs. 20,00,000 within eight weeks; on compliance, pre-deposit of the balance demand was waived and recovery of the balance was stayed during pendency of the appeal.

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Issues: Whether, in the appeal against demand of service tax and inadmissible cenvat credit, the appellant was entitled to waiver of pre-deposit and stay of recovery pending disposal of the appeal.

Analysis: The appeal involved a prima facie challenge to the demand arising from cenvat credit on finished goods received back from a job worker and a further demand based on reconciliation of receipts and receivables. On the material placed, the order records that prejudice to the Revenue was apparent and that pre-deposit was warranted for consideration of the appeal.

Outcome: The appellant was directed to deposit Rs. 20,00,000 within eight weeks, and upon compliance, pre-deposit of the balance demand was waived and recovery of the balance was stayed during pendency of the appeal.

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