2010 (11) TMI 302 - AT - Service Tax

Waiver of pre-deposit - Rule 7 of CCR - input Service tax credit taken by the appellant has been denied on the sole ground that the invoices against which credits were availed had not been addressed to the appellant s manufacturing unit - assessee had taken credit in excess of what was shown on the invoice or that the assessee was engaged exclusively in the manufacture of exempted goods or production of exempted service - Decided in the favour of the assessee

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery sought by M/s. Millipore India Pvt. Ltd. for irregularly availed Service tax credit.
2. Denial of input service credit based on invoices not addressed to the manufacturing unit.
3. Compliance with Rule 7 of Cenvat Credit Rules for distribution of credit.

Analysis:
1. The application filed by M/s. Millipore India Pvt. Ltd. sought waiver of pre-deposit and stay of recovery of an amount irregularly availed as Service tax credit, along with penalties. The appellant argued that the denial of input Service tax credit was based on invoices not addressed to the manufacturing unit but to different sales offices of the assessee. The appellant contended that as per Cenvat Credit Rules, credit for input services could be availed by the manufacturer of the final product or the provider of output services, and in this case, the services were received by the assessee. The appellant claimed that the credit was admissible in accordance with the law, challenging the sustainability of the demand and penalties imposed.

2. On the other hand, the learned SDR argued that the appellant did not comply with the conditions prescribed in Rule 7 of Cenvat Credit Rules for allowing credit, as the input services were received only by the sales offices of the assessee. Another ground for denying the credit was the absence of the name and address of the person receiving the taxable service on the relevant invoices. The SDR maintained that the impugned order was legally passed based on these grounds.

3. Upon careful consideration of the case records and submissions from both sides, the judge found that the denial of input service credit was primarily due to the invoices not displaying the name and address of the assessee, and the appellant's failure to follow the distribution procedure as per Rule 7 of Cenvat Credit Rules. However, the judge noted that the invoices were in the address of the assessee, even though they lacked details of the factory. Regarding the compliance with Rule 7 of CCR, the judge highlighted that there was no evidence of the appellant exceeding the credit shown on the invoice or being exclusively engaged in manufacturing exempted goods or services. Consequently, the judge concluded that the appellant had established a prima facie case against the demand and penalties, leading to the waiver of pre-deposit and stay of recovery until the appeal's disposal.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the legal provisions invoked, and the judge's reasoning in granting the waiver and stay of recovery in favor of M/s. Millipore India Pvt. Ltd.