2014 (12) TMI 123 - HC - Service Tax

CENVAT Credit - Whether the Tribunal below committed substantial error of law in holding that the respondent had paid service tax on input service by way of utilization of cenvat credit despite the fact that as per Rule 3(4)(e) of the Cenvat Credit Rules 2004 the utilization of payment of service tax is available on output service - Held that - appellant has placed reliance on the instructions of the Board dated 3-10-2005 which has clarified Section 68(2) of the Finance Act 1994. These instructions of the Board are not relevant for the purpose of deciding this Tax Appeal. For the aforesaid reasons no substantial question of law arises - Decided against Revenue.

Summary

Issues:
1. Interpretation of Rule 3(4)(e) of the Cenvat Credit Rules, 2004 regarding utilization of Cenvat credit for input service.
2. Whether Cenvat credit can be utilized for input service based on Tribunal judgments.
3. Relevance of Board instructions dated 3-10-2005 in deciding the Tax Appeal.

Issue 1: Interpretation of Rule 3(4)(e) of the Cenvat Credit Rules, 2004
The primary issue in this case revolves around the interpretation of Rule 3(4)(e) of the Cenvat Credit Rules, 2004, specifically concerning the utilization of Cenvat credit for input service. The Tribunal held that Cenvat credit can be utilized for input service, contrary to the appellant's argument that it is only available for output service as per the said rule.

Issue 2: Utilization of Cenvat credit for input service based on Tribunal judgments
The Tribunal relied on various judgments, including M/s. Ambuttar Petrochem Ltd. and Others v. C.C.E, Raipur, C.C.E, Chandigarh v. Nahar Industrial Enterprises Ltd., India Cements Ltd. v. C.C.E, Salem, and C.C.E, Nagpur v. Visaka Industries Ltd., to support its stance that Cenvat credit can indeed be utilized for input service. The Tribunal emphasized that the law on this matter has been settled through these decisions, allowing recipients to pay service tax on goods transport agency services from the Modvat credit account.

Issue 3: Relevance of Board instructions dated 3-10-2005
The appellant cited instructions from the Board dated 3-10-2005, clarifying Section 68(2) of the Finance Act, 1994. However, the court deemed these instructions irrelevant in the context of the Tax Appeal, leading to the dismissal of the appeal on the grounds that no substantial question of law arises from the appellant's arguments.

In conclusion, the judgment clarifies the interpretation of Rule 3(4)(e) of the Cenvat Credit Rules, 2004, addresses the utilization of Cenvat credit for input service based on Tribunal precedents, and highlights the limited relevance of Board instructions in the decision-making process.