2011 (8) TMI 550 - AT - Service Tax

Cenvat credit - According to Clause (ZZP) of Clause (105) of section 65 of the Act, taxable service means services provided or to be provided to any person, by Goods Transport Agency in relation to transport of goods by road in a goods carriage - Admittedly, the appellant is not providing any taxable goods transport service to any person nor the appellant is a Goods Transport Agency. Cenvat credit of duty paid on motor vehicles is admissible only to Goods Transport Agency which provides taxable service to any person in relation to transport of goods by road. Therefore, the definition of capital goods clear shows that credit of duty paid on motor vehicles would be available only to a Goods Transport Agency providing goods transport service and not a person who is liable to pay service tax - Decided against the assessee.

Summary

Issues:
1. Eligibility of cenvat credit on duty paid for motor vehicles by a manufacturing company.
2. Interpretation of provisions related to Goods Transport Agency service and cenvat credit eligibility.
3. Application of Section 68(2) of the Finance Act, 1994 in determining cenvat credit eligibility.
4. Analysis of Central Credit Rules 2004 and definition of output service for cenvat credit availment.

Issue 1:
The case involved the eligibility of a manufacturing company, engaged in producing PVC pipes and fittings, for cenvat credit on duty paid for motor vehicles. The company claimed that as a manufacturer, they were entitled to the credit since motor vehicles were considered capital goods. However, the jurisdictional Superintendent of Central Excise disagreed, leading to a show cause notice and subsequent proceedings demanding the cenvat credit with interest.

Issue 2:
The appellant argued that they should be treated as a provider of Goods Transport Agency service under Section 68(2) of the Finance Act, 1994, making them eligible for the cenvat credit. The appellant relied on the definition of output service and provisions empowering the Central Government to shift the tax liability to the service receiver. The appellant contended that being registered as a Goods Transport Agency service provider and paying service tax for the service received made them eligible for the cenvat credit.

Issue 3:
The Departmental Representative (DR) countered the appellant's claim, stating that being a receiver of Goods Transport Agency service did not entitle them to cenvat credit on duty paid for motor vehicles. The DR argued that only actual service providers were eligible for such credit, not service receivers.

Issue 4:
The judgment analyzed the Central Credit Rules 2004, particularly Rule 2(r) which defines the provider of taxable service. The appellant's reliance on this rule was deemed misplaced as it was clarified that a person liable to pay service tax does not automatically become a deemed provider of taxable service. The judgment highlighted that the amendment excluding Goods Transport Agency service from the definition of output service did not support the appellant's claim for cenvat credit before the specified date in the proceedings.

In conclusion, the Tribunal rejected the appeal, emphasizing that the appellant, as a manufacturing company, was not providing Goods Transport Agency services and therefore was not eligible for cenvat credit on duty paid for motor vehicles. The judgment underscored the importance of utilizing capital goods for providing output services to claim cenvat credit, which was not demonstrated by the appellant in this case.