ORDER
S.L. Peeran, Member (J)
1. All these three Revenue’s appeals arise from a common question of law and facts and hence they are taken up together for the disposal as law. The appellants were registered for payment of Service Tax on Transport of Goods by Road Services and were discharging Service Tax in respect of input services. The Original authority proceeded against the assessee for recovery of Service Tax on the ground that the assessees are not eligible for Cenvat credit for the payment of Service Tax and Education Cess on GTA Services. The assessee contested the issue and submitted that Service Tax paid on input goods and input services can be utilized for payment of Service Tax and also for Excise Duty on the goods manufactured. The findings recorded by the Commissioner (Appeals) in the Order-in-Appeal No. 273/2006 CE dated 07.09.2006, (in Appeal No. ST/335/2006) are noted herein below:
I have gone through the records of these cases and carefully considered the submissions of the appellants. In all the four appeals issue of dispute is same and pleas are also identical. Hence I pass a common order.
The disputed issue is whether the appellants who pay service tax as recipient of goods transport services are entitled to utilize credit taken of such Service Tax paid for payment of Service Tax on Goods Transport Service treating it as an output service also.
The appellants have relied strongly on definition of “output services” as per Rule 2(p) as it stood prior to 19.04.2006 and “provider of taxable services” as per Rule 2 (r) to claim that Goods Transport Service is both input and output service in their case and they are entitled to use accumulated credit of duty paid on input service of Goods Transport Service for paying duty on output services of Goods Transport Services. In other words they pay Service Tax on Goods Transport Services, take credit of it and use the same credit for paying Service Tax for next installment of Service Tax on Goods Transport Services. They do not actually provide any such output services, but use credit for paying Service tax on Goods Transport Service under shelter of deeming provision referred to above.
I find that the issue has been directly addressed by CBEC in its Circular No. 345/4/2005-TRU dated 03.10.2005. It is clear that when the person discharging Service Tax liability is not the provider of output services, such recipient of taxable services even if they discharge their Service Tax liability under Section 68(2) are not entitled to avail credit of the Service Tax paid on taxable services.
I therefore conclude that availing of credit on Service Tax on Goods Transport Service paid by the recipient of such a service is not available unless the person concerned is also providing some other output services or is manufacturing dutiable goods. In the present case the appellants are manufacturing dutiable goods on which Cenvat Credit taken on input service as well as input goods is available for utilization. I further find that there is no one to one correlation between credit availed and utilized. It is therefore clear that above referred Circular dos not bar the appellants from availing credit on Goods Transport input services and use the credit for either paying duty on deemed Goods Transport output services or on manufactured goods. Under the circumstances it makes no difference whether the appellants used duty on next batch of Goods Transport Services by treating them as output services or on goods manufactured and cleared by them on payment of Central Excise duty. There is nothing against this in the relevant legal provisions including the Circular dated 03.10.2005, the Circular will have effect only if appellants were receiving Goods Transport Services without manufacturing excisable goods cleared on payment of duty.
I allow the four appeals on all counts.
The Revenue in this matter has contended that the Board’s Circular No. 345/4/2005-TRU dated 03.10.2005 was amended in the terms of definition of “output services” as per Rule 2(p) as it stood prior to 19.04.2006. Therefore they are not eligible to utilize the Service Tax paid on Inward Freight (being input services) in terms of Rule 3 of the Cenvat Credit Rules, 2004.
2. I have heard both the sides in the matter. The learned DR relied on the ‘Grounds of the Appeals’. The learned Chartered Accountant submits that the period in question in all the three appeals is prior to the amendment to the definition of “output services” as per Rule 2(p). He submits that the Tribunal in the following cases has upheld the assessee’s view that the Service Tax can be paid from Cenvat credit:
(i) CCE, Chandigarh v. Nahar Industrial Enterprises Ltd. 2007-TIOL-555-CESTAT-DEL
(ii) The India Cements Ltd. v. CCE, Salem 2007-TIOL-645-CESTAT-MAD
He submits that the issue has been settled in these matters in the assessee’s favour and therefore the appeals are to be rejected.
3. I have carefully considered the submissions made by both the sides. I notice from both the rulings that the Tribunal’s Delhi and Chennai Benches have examined the issue and held that the credit can be utilized for payment of Service Tax. The Revenue’s appeal has been rejected and the party’s appeal has been allowed in both the cited cases. The Commissioner’s (Appeals) order cited supra is correct in law, in terms of the ratio of the cited judgments. There is no merit in these appeals and the same are rejected.
(Pronounced and dictated in the open court)