ORDER
S.L. Peeran, Member (J)
1. Both the appeals raise from common question of law and facts and hence, they are taken up together for the disposal as per law. The appeal No. ST/349/2006 arises from the Order-in-Appeal No. 284/2006-CE dated 20.09.2006 by which the Commissioner (Appeals) has set aside the Order-in-Original No. 34/2006 dated 10.07.2006 passed by the Assistant Commissioner of Central Excise, Hubli Division. The appeal No. ST/350/2006 arises from the Order-in-Appeal No. 285/2006 CE dated 20.09.2006 setting aside the Order-in-Original No. 27/2006 dated 28.06.2006, passed by the same Assistant Commissioner of Central Excise. The findings in both the Orders-in-Appeals are almost identical and hence the findings recorded in the Order-in-Appeal No. 284/2006 CE dated 20.09.2006 are reproduced herein below:
I have gone through the record of this case and carefully considered the submissions made by the appellants.
The dispute relates to use of Service Tax input credit accumulated by the appellant towards discharge of Service Tax liability on goods transport service availed by the appellants where they are liable to pay Service Tax as received of service.
The appellant are manufacturers of excisable goods and also registered under Service Tax for receiving goods transport service. They accumulated Service Tax credit which was utilized for paying Service Tax on goods transport service. The adjudicating authority has denied use of Service Tax credit accumulated for payment of Service Tax of goods transport service on the ground that goods transport service cannot be treated as an output service for them as they are not providing this service to other users.
I disagree with the findings. In this contention I refer to Circular F. No. 345/4/05 TRU dated 03.10.2005 which makes it clear that denial of availment of Service Tax credit earned on account of payment of Service Tax on input services is applicable only if the entity concerned is not a manufacturer or a provider of any other output service. Thus the present appellants are excluded from the purview of this Circular as they are also a manufacturer of excisable goods.
I find the appellants being a Service Tax assessee as well as a manufacturer of excisable goods, are eligible to use accumulated input credits earned on account of input services as well as input goods for making payment of goods transport service. This they can do either by treating the same as output service in terms of Rule 2(p) as it stood prior to 19.04.2006 and Rule 2 (r) of Cenvat Credit Rules, 2004 or by virtue of their entitlement to use any input credit availed, whether on excisable inputs or taxable input services, earned in terms of Rule 2(I) read with Rule 3(1) and 3(4) for making payment of duty on any taxable service or excisable goods on which they are liable to pay.
I am accordingly of the view that the appellant has not committed any irregularity by discharging Service Tax liability on goods transport service received by them by treating the same as output service using accumulated credit of Service Tax paid in as much as use of such credit is open to them for discharging duty liability on any dutiable goods or taxable services. There is no one to one correlation between credit availed and credit utilized. I therefore find that the impugned order is liable to be set aside.
The Revenue is aggrieved with both the orders and filed these appeals. It is stated in the ‘Grounds of Appeal’ that the assessee are not providing any output services except receiving the input services of GTA. Therefore, in terms of Rule 3 of Cenvat Credit Rules, 2004, the utilization of Cenvat credit for payment of service tax on Input service instead of paying on Output service is not in accordance with the provisions of Cenvat Credit Rules, 2004.
2. The learned Jt. CDR re-iterates the ‘Grounds of Appeal’ raised in the appeals. He submits that the assessee have not obtained any service tax registration for discharge of tax liability (Input services) under Section 68(1) of the Finance Act, 1994.
3. The learned Counsel submits that the assessee had obtained registration for payment of service tax on Input services of GTA. He relies on the ruling rendered by this Bench on the very issue in case of Andhra Pradesh Paper Mills Ltd. v. Commissioner of Central Excise, Visakhapatnam 2007 (8) S.T.R. 166 (Tri. – Bang.). The findings recorded in Para 4 of the cited order are reproduced herein below:
4. We have heard both sides in the matter. According to the Adjudicating authority, the inward transportation of goods by road service is an “input service” as provided in Clause (ii) of Rule 2(I) of the Cenvat Credit Rules, 2004. Since in terms of Rule 3(4)(e) of the Cenvat Credit Rules, Cenvat Credit may be utilized for payment of Service Tax on any Output Service, the appellant is not entitled to utilize the Cenvat Credit for payment. “Output service” is defined in Rule 2(p) of the Cenvat Credit Rules, 2004. The same is reproduced below:
Output service’ means any taxable service provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions ‘provider’ and ‘provided’ shall be constituted accordingly
The Explanation (omitted) reads as under-
Explanation:- For the removal of doubts it is hereby clarified that if a person liable for paying Service tax does not provide any taxable service or does not manufacture final products, the service for which he is liable to pay Service Tax shall be deemed to be the output service.
In terms of the explanation above, the service on which the appellant pays Service tax will be deemed to be an ‘output service’, the Service tax can be paid by way of Cenvat Credit in terms of Rule 3(4)(e) of the Cenvat Credit Rules. In view of the above, the impugned order has no merits. The same is set aside by allowing the appeal with consequential relief, if any.
The learned Counsel further relied on the Tribunal’s Chennai Bench judgment rendered in the case of India Cements Ltd. v. Commissioner of Central Excise, Salem 2067 (7) STR 569 (Tri. – Chennai) wherein an identical finding has been given. He drew my attention to the findings given by the Tribunals Delhi Bench in the case of Commissioner of Central Excise, Chandigarh v. Nahar Industrial Enterprises Ltd. 2007 (7) STR 26 (Tri. – Del.). He also drew my attention to the Chennai Bench’s another decision rendered in the case of R.R.D. Tex Pvt. Ltd. v. Commissioner of Central Excise, Salem 2007 (8) S.T.R. 186 and Mumbai Bench decision rendered in the case of Commissioner of Central Excise, Nagpur v. Visaka Industries Ltd. 2007 (8) S.T.R. 231. He submits that in terms of the rulings of all the Benches cited supra, the very issue is settled in the assessee’s favour and therefore the impugned orders are legal and proper.
4. I have carefully considered the submissions made by both the sides and the findings recorded by the Commissioner (Appeals) as extracted above. All the rulings including this Bench judgment rendered in the case of Andhra Pradesh Paper Mills Ltd. 2007 (8) S.T.R. 166 (Tri. – Bang.), are in support of the findings recorded by the Commissioner (Appeals). As the issue is fully settled by the judgments cited supra in the assessee’s favour, I do not find any merit in the Revenue’s appeals and the same are rejected.
(Pronounced and dictated in the open court)