2010 (7) TMI 788 - AT - Central Excise

Cenvat credit - Whether credit can be allowed on the basis of debit entry in the cenvat credit account Held that - payment of service tax was not made through challan instead the payment was made through debit entry in the cenvat credit account and the debit entry in the cenvat credit account was made on the basis of LR i.e. Lorry receipt received by the respondents from the transporter. LR has all the details showing the name of consignor and consignee, serial number and in the note below it is stated that the service tax to be paid by the consignee. Therefore, the details mentioned in the LR provided all the required information. Departmental appeal is dismissed.

Summary

Issues:
- Admissibility of credit on the basis of debit entry in the cenvat credit account without specified documents under Rule 9(1) of Cenvat Credit Rules, 2004.

Analysis:
1. The appeal was filed by the Revenue against the Order-in-Appeal set aside by the Commissioner of Central Excise, Jaipur. The case involved the respondents, engaged in manufacturing man-made yarn and registered for service tax under Goods Transport Agency service. The dispute arose when the department alleged that the respondents took credit without proper cenvat documents, leading to a show-cause notice proposing disallowance of credit, interest, and penalty. The lower authority disallowed the credit, imposed penalties, and ordered recovery. The respondents appealed, and the Commissioner (Appeals) allowed their appeal, prompting the Revenue's appeal before the Tribunal.

2. The key issue revolved around the admissibility of credit based on a debit entry in the cenvat credit account without the specified documents under Rule 9(1) of Cenvat Credit Rules, 2004. The Revenue contended that since the required documents were not available with the respondents, the credit should not be allowed. On the other hand, the respondents argued that the credit for service tax on GTA service received for inward transport was permissible. They relied on various legal precedents to support their claim.

3. The Tribunal analyzed the cited decisions and established that a person liable to pay tax on goods transport agent service, not being the actual service provider, could utilize credit for tax payment. In this case, the issue was whether credit could be allowed based on a debit entry in the cenvat credit account, even without the specified documents. The Tribunal noted that the respondents paid service tax through a debit entry in the cenvat credit account based on the Lorry receipt received from the transporter. The Lorry receipt contained all necessary details, including the consignor, consignee, and service tax payment information, fulfilling the requirements under Rule 9(1) of Cenvat Credit Rules, 2004.

4. Upon reviewing Rule 9(1) of Cenvat Credit Rules, the Tribunal concluded that credit could be taken based on documents evidencing service tax payment. In this case, the payment was made through a debit entry in the cenvat credit account supported by the LR, which provided all essential information required for credit admissibility. Consequently, the Tribunal found no fault in the Commissioner (Appeals)'s decision and dismissed the departmental appeal, upholding the allowance of credit to the respondents based on the debit entry in the cenvat credit account supported by the LR.