2011 (2) TMI 1060 - AT - Service Tax

Waiver of pre-deposit - cenvat credit denied of the service tax paid by their contractor on the service rendered for fabrication of factory premises on the basis of documents which according to the adjudicating authority were improper - Held that - As there is no dispute that the assessee has entered into a contract for erection / fabrication of the factory premises with one M/s. Interach Building Products Pvt. Ltd. It is also not in dispute that the contractor has been raising running bills & been discharging service tax liability on the contract executed by him and the assessee has been paying the said service tax to the contractor. Thus if the assessee was discharging service tax liability raised by the contractor and if the service is eligible as input service as per the definition in the Cenvat Credit Rules 2004 the assessee should not be denied the credit - remand the matter back to the adjudicating authority to re-consider the issue afresh.

Summary

Issues:
- Stay petition for waiver of pre-deposit of disallowed cenvat credit, interest, and penalty.
- Eligibility of the appellant to avail cenvat credit on service tax paid by their contractor for fabrication of factory premises.
- Proper consideration of documents by the adjudicating authority.
- Discharge of service tax liability by the contractor and payment by the assessee.
- Interpretation of 'input service' as per Cenvat Credit Rules, 2004.
- Remand of the matter to the adjudicating authority for re-consideration.

Analysis:
The judgment pertains to a stay petition seeking waiver of pre-deposit of a substantial amount along with interest and penalty related to disallowed cenvat credit. The appellate tribunal, after hearing both parties and examining the records, noted that the adjudicating authority confirmed the demand based on the belief that the appellant was not entitled to cenvat credit for service tax paid by their contractor due to improper documents. However, upon review, the tribunal found that the appeal itself could be disposed of at that stage. It was established that the appellant had a contract with a specific company for the fabrication of factory premises, and the contractor was paying service tax, which the appellant reimbursed. The tribunal emphasized that if the service qualified as an 'input service' under the Cenvat Credit Rules, 2004, the appellant should not be denied the credit. The tribunal concluded that the adjudicating authority had not appropriately considered this crucial aspect and, without expressing any opinion on the case's merits, remanded the matter for a fresh review ensuring the principles of natural justice are followed. Consequently, the appeal was allowed by remand, leaving all issues open for further consideration by the adjudicating authority.