Gimatex Indst. P. Ltd vs Commissioner Of Central Excise, Nagpur

(Arising out Order-in- Appeal No. SR/105/NGP/2010 dated 25.03.2010 passed by the Commissioner of Central Excise (Appeals), Nagpur)

For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial)

1. Whether Press Reporters may be allowed to see No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy Yes of the Order?

4. Whether Order is to be circulated to the Departmental Yes authorities?

Gimatex Indst. P. Ltd. Appellant

Vs.

Commissioner of Central Excise, Nagpur Respondent

Appearance:

None for the appellant Shri H.M. Dixit, AC (AR) for the respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial)

Date of hearing : 18-06-2015 Date of decision : 18-06-2015

O R D E R No:..

This appeal is directed against order in appeal number SR/105/NGP/2010 dated 25.03.2010.

2. When the matter was called out none appeared on behalf of the appellant nor there is any request for adjournment. On perusal of the records, I find that the issue lies in narrow compass, accordingly I take up the appeal for disposal in the absence of any representation from appellant.

3. Heard the learned departmental representative and perused the records.

4. On perusal of records, it transpires that the issue in the case is regarding the utilisation of Cenvat credit during the period April 2005 to March 2007 for discharge of service tax liability on the outward transportation by engaging goods transport operators. It is a case of the appellant that there is no bar in discharging the service tax liability by debiting in Cenvat account, while it is the case of the revenue that such duty liability has to be discharged in cash only. Both the lower authorities have held against the appellant.

5. It is undisputed that service tax liability is liable to be discharged on the outward transportation by the appellant as a recipient of the services from the transport operators. The only question is whether during the relevant period, appellant is eligible to discharge the service tax liability by debiting the Cenvat account. During the material period in question, the provisions of rule 3 (4) of the Cenvat credit rules 2004 mandates utilisation of Cenvat credit for discharge of any excise duty as also service tax on any output service. It is undisputed that during the relevant period in question, in this case the service tax on outward transportation services were considered as liable to be discharged by the recipient of the outward transportation services. Both the lower authorities have interpreted the provision to hold that as per rule 2 of Cenvat credit rules 2004 appellant does not qualify as provider of output service. I find that both the lower authorities have misread the provisions inasmuch that provisions of Rule 2 (r) specifically provides that a person liable for paying service tax is to be construed as provider of taxable service and this position is not disputed. The provisions of Rule 2(r) and Rule 3(4) when read holistically, it would seem that Cenvat credit can be utilised for discharge of service tax during the material period i.e. April 2005 to March 2007 by debiting in Cenvat account and need not be paid only in cash.

6. This my view is fortified by the decisions of the Tribunal more importantly in the case of CCE Chandigarh Vs Nahar Industrial Enterprises Ltd  2007 TIOL-555-CESTAT-DEL. Revenue aggrieved by this order, preferred an appeal before the Honourable High Court of Punjab and Haryana and the appeal was dismissed by the High Court as reported at 2012 (25) STR 129 (P&H).

7. In view of the foregoing and the authoritative judicial pronouncement, I hold that the impugned order is incorrect and liable to be set aside and I do so.

8. Impugned order is set aside and appeal is allowed with consequential relief if any.

(Operative part pronounced in Court)

(M.V. Ravindran) Member (Judicial)

//SR

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