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Issues:
1. Disallowance of Input Service credit on the ground of usage for operation purpose. 2. Eligibility for input service credit on operation service. 3. Prima facie case for waiver of pre-deposit of duty penalty. Analysis: 1. The appellant, registered under "Maintenance & Repair Service," entered into a contract for power plant maintenance with M/s. Hindustan Zinc Ltd. The Revenue disallowed Input Service credit, claiming that certain services were used for operation and not maintenance. The appellant contended that tax was paid on the entire contract amount, including maintenance and operation, without distinguishing between works in India and outside. The Bench noted that only maintenance activities are taxable under this category. However, as tax was paid on the entire amount, denial of credit for input services used in maintenance and operation was deemed unjustified. Thus, the appellant established a prima facie case for waiver of pre-deposit of duty penalty. 2. The Department reiterated the Commissioner (Appeals) order, arguing that input services used in operation cannot be credited for maintenance and repair. They contended that since tax was paid on maintenance and repair, the appellant was not eligible for input service credit on operation services. However, the Tribunal found that the appellant had indeed paid tax on the entire contractual amount covering maintenance and operation services. Therefore, the denial of credit based on the usage of input services for maintenance was considered unjustified, leading to the allowance of both stay applications. 3. After hearing both parties and examining the records, the Tribunal observed that the appellants had paid tax on the entire contract amount, encompassing maintenance and operation services. Consequently, the denial of credit for certain input services used in maintenance was deemed unwarranted. As a result, the appellants were found to have made a prima facie case for the waiver of pre-deposit of duty penalty. The Tribunal allowed both stay applications, recognizing the appellant's tax payments on the entire contractual amount as sufficient justification for the waiver.
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