2010 (12) TMI 542 - AT - Service Tax

Mode of payment - services of GTA - The demand is raised on the ground that the appellants should have paid the service tax only through Cash/PLA and through Cenvat credit account - The appellants are permitted to maintain a common Cenvat account into which credit of duty paid on inputs and service tax paid on input services are allowed to be taken as credit - The purpose for which use of the Cenvat account has been permitted has been listed - There is no restriction placed for utilisation of Cenvat credit by the manufacturing unit towards payment of service tax as a service provider or deemed service provider - Therefore there is no irregularity on the part of the appellants using Cenvat credit account - The order of the Commissioner (Appeals) is set aside and appeal is allowed with consequential relief as per law.

Summary

Issues:
Confirmation of demand of Service Tax, interest, and penalty on the appellant.

Analysis:
The judgment deals with an appeal against the confirmation of a demand for Service Tax, interest, and penalty on the appellant. The appellant, a manufacturer of excisable goods, availed the services of a Goods Transport Agency (GTA) in connection with receiving inputs. The demand was raised on the basis that the appellant should have paid the service tax only through Cash/PLA and through the Cenvat credit account. The issue revolved around whether the appellant could use the Cenvat credit towards the payment of service tax as a service provider.

The learned Advocate for the appellant argued that previous decisions of the Tribunal had settled this issue, stating that there is no restriction on utilizing Cenvat credit by a manufacturing unit for paying service tax as a service provider. The Advocate referred to specific cases such as CCE v. Nahar Industrial Enterprises Ltd. and India Cements Ltd. v. CCE to support this argument.

The Tribunal, after considering the submissions, held that the appellants are allowed to maintain a common Cenvat account for taking credit of duty paid on inputs and service tax paid on input services. The purpose for which the Cenvat account can be used was outlined, and there was no restriction on utilizing Cenvat credit by the manufacturing unit for paying service tax as a service provider. Consequently, the Tribunal found no irregularity in the appellant using the Cenvat credit account for this purpose.

In conclusion, the Tribunal set aside the order of the Commissioner (Appeals) and allowed the appeal with consequential relief as per the law. This judgment clarifies the permissible use of Cenvat credit by a manufacturing unit for the payment of service tax as a service provider, based on established precedents and legal provisions.