2009 (5) TMI 740 - AT - Central Excise

Summary

Issues Involved:
Interpretation of Rule 3(4) of Cenvat Credit Rules, 2004 regarding utilization of Cenvat credit for payment of service tax on GTA service.

Detailed Analysis:

1. Interpretation of Rule 3(4) of Cenvat Credit Rules, 2004:
The judgment dealt with the issue of whether the utilization of Cenvat Credit for payment of service tax on GTA service is permissible under Rule 3(4) of the Cenvat Credit Rules, 2004. The Commissioner (Appeals) had opined that such utilization was in contravention of the said rule. However, the appellant's representative relied on a Tribunal decision in the case of Ambattur Petrochem Ltd. v. CCE, Raipur, which highlighted that Rule 3(4) allows for the utilization of Cenvat credit for payment of service tax on any output service. The Tribunal's decision emphasized that the payment of service tax is a specifically authorized item concerning service tax credit. Moreover, the judgment referred to the case of Nahar Industrial Enterprises Ltd., where it was held that manufacturers could utilize Cenvat Credit for paying service tax on GTA service. Based on these precedents, the Judge found that the impugned orders were not sustainable, setting them aside and allowing all appeals with consequential relief.

2. Application of Precedents:
The judgment extensively relied on previous Tribunal decisions to interpret the provisions of Rule 3(4) of the Cenvat Credit Rules, 2004. The case of Ambattur Petrochem Ltd. and Nahar Industrial Enterprises Ltd. were pivotal in establishing that manufacturers could indeed utilize Cenvat Credit for the payment of service tax on GTA service. By aligning with these precedents, the Judge concluded that the impugned orders were not legally sound and proceeded to overturn them, granting relief to the appellants.

3. Final Decision:
In conclusion, the judgment resolved the issue by clarifying that the utilization of Cenvat Credit for payment of service tax on GTA service is permissible under Rule 3(4) of the Cenvat Credit Rules, 2004. By citing relevant precedents and legal provisions, the Judge set aside the earlier orders and allowed all appeals, providing the appellants with consequential relief. The decision serves as a significant clarification regarding the interpretation and application of Cenvat Credit Rules in the context of service tax payments on GTA services.