2016 (10) TMI 183 - AT - Central Excise

Demand and imposition of penalty - utilisation of Cenvat Credit instead of making payment by cash or payment through PLA in discharging Service Tax on GTA service - recovery of Service Tax paid during the period of July 2006 to Sept. 2006 - Held that - the issue is no more res integra and settled by the Gujarat High Court in the case of CCE&C Vs Panchmahal Steel Ltd. 2014 (12) TMI 876 - GUJARAT HIGH COURT . Therefore, in view of the same, I do not find any merit in the impugned order and is set aside. - Decided in favour of appellant

Summary

Issues:
- Appeal against demand notice for Service Tax payment on GTA service using Cenvat credit instead of cash or PLA.
- Interpretation of Rule 3 of Cenvat Credit Rules, 2004.
- Application of precedents set by Gujarat High Court in similar cases.

Analysis:
The case involved an appeal against a demand notice for Service Tax payment on GTA service using Cenvat credit instead of cash or PLA. The appellants, engaged in manufacturing excisable goods, had paid Service Tax through their Cenvat account, leading to a demand notice and penalty imposition. The Ld Advocate for the appellant relied on the decision of Hon’ble Gujarat High Court in a similar case involving Panchmahal Steel Ltd to support their argument. The Ld AR for the Revenue reiterated the findings of the Ld. Commissioner (Appeal).

The Member (Judicial) referred to the settled issue by the Gujarat High Court in Panchmahal Steel Ltd’s case, emphasizing the provisions of Rule 3 of the Cenvat Credit Rules, 2004. The Rule allows the utilization of Cenvat credit for payment of Service Tax on any output service. The judgment highlighted that despite the liability to pay Service Tax on GTA service, the assessee could use Cenvat credit for such duty payment. The Member (Judicial) concluded that the issue was no longer open to interpretation and dismissed the Tax Appeal, setting aside the impugned order and allowing the appeal with consequential relief as per law.

In summary, the judgment clarified the permissible use of Cenvat credit for paying Service Tax on GTA service, following the precedent set by the Gujarat High Court. The decision reinforced the statutory provisions and upheld the appellant's right to utilize Cenvat credit for such tax liabilities, ultimately allowing the appeal and providing relief accordingly.