2007 (6) TMI 529 - AT - Service Tax

Summary

Issues involved: Interpretation of Cenvat Credit Rules 2004 regarding utilization of service tax credit for payment of service tax on transport services by manufacturers of excisable goods.

Summary:
The appeals before the Appellate Tribunal CESTAT NEW DELHI involved the question of whether manufacturers of Chlorine parafide can use service tax credit for payment of service tax on transport services to their factories. The impugned order had denied this right, stating that manufacturers are not entitled to using service tax credit for transport services. However, the Tribunal referred to Sub-Rule 4 of Rule 3 of Cenvat Credit Rules 2004, which allows credit utilization for payment of excise duty and service tax on any output service. The Tribunal held that since the appellants pay service tax on transport services, they are considered service providers, and the transport involved constitutes an output service. Therefore, the Commissioner's finding that manufacturers cannot be treated as providers of output service was deemed unsustainable. The Tribunal's decision in a previous case supported the appellants' position. Consequently, the appeals were allowed in favor of the appellants with any consequential relief granted to them.