2008 (7) TMI 142 - AT - Service Tax

CESTAT ruling: Deposit Rs. 40,000 within 4 weeks for service tax waiver

The Appellate Tribunal CESTAT NEW DELHI ruled that the applicants must deposit Rs. 40,000 within 4 weeks, with the remaining amount of service tax waived ... Input tax credit - credit for input used in or in relation to the manufacture of goods - service tax on insurance charges - capital goods and inputs - pre-deposit for stay of demandInput tax credit - credit for input used in or in relation to the manufacture of goods - service tax on insurance charges - capital goods and inputs - Entitlement of the appellant to credit of service tax paid on insurance charges relating to vehicles and building - HELD THAT: - The Tribunal examined whether the service tax paid on insurance of items such as a school bus, cars, cash transactions and a building could be treated as creditable inputs or capital goods for a manufacturer. The Tribunal held that the appellant, as a manufacturer, is entitled to credit only in respect of inputs used in or in relation to the manufacture of goods. A school bus and the building were found not to be used in or in relation to manufacture and therefore do not fall within the scope of inputs or capital goods eligible for credit. On this prima facie assessment the denial of credit in respect of the insurance charges for the school bus and the building was sustained.Credit in respect of service tax on insurance of the school bus and the building is prima facie not allowable as inputs or capital goods used in or in relation to manufacture.Pre-deposit for stay of demand - input tax credit - Application for waiver of pre-deposit of duty and penalty - HELD THAT: - Having found that the credit claimed for certain insurance charges was not prima facie allowable, the Tribunal concluded that the case was not fit for total waiver of the pre-deposit. In exercise of its discretion the Tribunal directed the appellant to make a partial pre-deposit of duty-specified by the Tribunal-to secure the appeal. The Tribunal ordered that upon compliance with this partial deposit the balance pre-deposit of service tax would be waived, and listed the matter for reporting compliance.Applicants directed to deposit the specified partial amount within the time fixed; on deposit the remaining pre-deposit of service tax is waived.Final Conclusion: The Tribunal prima facie upheld the denial of credit for service tax on insurance of the school bus and the building as not being inputs or capital goods used in or in relation to manufacture, and refused a total waiver of pre-deposit; ordered a specified partial pre-deposit, upon which the balance pre-deposit was waived and compliance was to be reported. The Appellate Tribunal CESTAT NEW DELHI ruled on a case involving waiver of duty and penalty. The applicants sought waiver for duty of Rs. 1,15,181/- and penalty related to service tax on insurance charges for vehicles. The tribunal found that school bus and building were not eligible for credit as inputs for manufacturing goods. The applicants were directed to deposit Rs. 40,000/- within 4 weeks, with the remaining amount of service tax waived upon this deposit. Adjourned to 25th August, 2008 for compliance.