2014 (4) TMI 836 - AT - Central Excise

Waiver of pre deposit - Availment of CENVAT Credit - GTA Service - Held that - amendment in Rule 2(p) was taken note by the Division Bench of Tribunal in Shree Rajasthan Syntex Ltd. vs. CCE reported in 2011 (8) TMI 265 - CESTAT, NEW DELHI and it was held that inasmuch as there was no simultaneous amendment in the provisions of Rule 2(r) the utilizing of the credit for disposal of Service Tax liability by the respondent was in accordance with the law - Stay granted.

Summary

Issues:

1. Request for adjournment by the appellants.
2. Discharge of service tax liability using Cenvat credit instead of PLA.
3. Interpretation of the definition of input services.
4. Applicability of the decision of Hon'ble Punjab & Haryana High Court and Hon'ble Himachal Pradesh High Court.
5. Impact of the amendment in Rule 2(p) on the case.
6. Decision of the Division Bench of Tribunal in Shree Rajasthan Syntex Ltd. vs. CCE.
7. Dispensation of pre-deposit of duty and penalty.

Issue 1: Request for adjournment by the appellants

The appellants requested an adjournment, which was rejected by the Bench due to repeated adjournments in the past at the appellant's advocate's request. The Bench proceeded to decide the stay petition after hearing the learned DR and reviewing the impugned order.

Issue 2: Discharge of service tax liability using Cenvat credit instead of PLA

The appellant, engaged in the manufacture of cotton yarn exempted from excise duty, procured services from outside India, subject to service tax on a reverse charge basis. The appellant discharged the service tax liability using Cenvat credit availed on GTA services received.

Issue 3: Interpretation of the definition of input services

The revenue contended that the service tax should have been discharged out of PLA instead of utilizing Cenvat credit, citing a change in the definition of input services effective from 18.4.06 with an amendment in Rule 2(p). However, the period in question was around 2005-2006. The issue was deemed covered by decisions of Hon'ble Punjab & Haryana High Court and Hon'ble Himachal Pradesh High Court.

Issue 4: Applicability of the decisions of Hon'ble Punjab & Haryana High Court and Hon'ble Himachal Pradesh High Court

The decisions of Hon'ble Punjab & Haryana High Court in the case of Nahar Industrial enterprises and Hon'ble Himachal Pradesh High Court in the case of Auro Spg. Mills were considered relevant to the case at hand, providing guidance on the matter at hand.

Issue 5: Impact of the amendment in Rule 2(p) on the case

The amendment in Rule 2(p) was acknowledged, with the Division Bench of Tribunal in Shree Rajasthan Syntex Ltd. vs. CCE determining that the utilization of credit for the disposal of Service Tax liability by the appellant was in accordance with the law, as there was no simultaneous amendment in the provisions of Rule 2(r).

Issue 6: Decision of the Division Bench of Tribunal in Shree Rajasthan Syntex Ltd. vs. CCE

The decision of the Division Bench of Tribunal in Shree Rajasthan Syntex Ltd. vs. CCE was referenced to support the appellant's position that the utilization of credit for the disposal of Service Tax liability was lawful.

Issue 7: Dispensation of pre-deposit of duty and penalty

Given the prima facie decision on the issue based on previous judgments, the Bench dispensed with the condition of pre-deposit of duty and penalty, allowing the stay petition unconditionally.

This detailed analysis covers the various issues involved in the legal judgment, providing a comprehensive understanding of the case and the reasoning behind the decision.