Abatement under Notification No. 1/2006-ST

PJ/Case Laws/2011-12/1156

Case: Indian Oil Corporation Ltd. Vs Commr. of C. Ex., Mumbai-II

Citation: 2011 (22) S.T.R. 282 (Tri.-Mumbai)

Issue:- Abatement under Notification No. 1/2006-ST – condition of not availing cenvat credit for taking abatement benefit not applicable on service recipient of GTA.

Brief Facts:- Appellants had availed cenvat credit of service tax paid on GTA service during the period from May 06 to July 06 and availed benefit of abatement under Notification no. 1/2006- ST dated 1.03.2006 read with notification no. 12/2003-ST. Department sought to deny the Cenvat credit so taken on the ground that the appellants had availed inadmissible exemption provided under Notification no. 1/2006-ST dated 1.03.2006. The Adjudicating Authority confirmed the demand alongwith interest against the appellant in terms of Rule 14 of Cenvat credit Rules, 2004 and imposed equal amount of penalty on appellant under Section 11AC of the Act r/w Rule 15 of Cenvat Credit Rules. In appeal, the Commissioner (Appeal) upheld the order of the Adjudicating Authority. Aggrieved by the said order the applicant filed appeal before Tribunal and sought waiver of pre-deposit. The appellant has also filed stay application of recovery of amount demanded.

Appellant’s Contention:- Appellant submitted that they were service recipient and deemed provider of service. That Notification no. 1/2006-ST and Notification No. 12/2003-ST require the service provider not to avail Cenvat Credit on capital goods, inputs and input services. Notification no. 12/03 similarly restricted the service provider from availing the notification benefit. But the restriction laid down in the Notification did not apply on them who are service recipient. Appellant relied on the finding of Tribunal in case of Commr. of C.Ex., Rajkot Vs. Sunhill Ceramics Pvt. Ltd. [2008(9)S.T.R. 530 (Tri. Ahmd.)] wherein it has been held that the condition of not taking credit of duty paid on inputs or capital goods used for providing such taxable service necessarily should relate to the service actually rendered by the Transport Agency. The respondent has not actually rendered the said services and as a consignor he has not availed the credit of duty paid on inputs or capital goods for providing such taxable services.

The appellant further submit that they have already deposited 50% of the duty demand on direction of the Commissioner (Appeals) to decide their appeal.

Respondent’s Contention:- Departmentsubmitted that the appellant had availed inadmissible exemption provided under Notification no. 1/2006- ST read with Notification no. 12/2003-S.T. The Notification allowed abatement of 75% of the taxable value for the purpose of discharge of service tax under the category of GTA service on the condition that the service provider had not availed credit on inputs and capital goods and input service used for providing the service. Exemption is also subject to the condition that the service provider has not availed the benefit of Notification no. 12/2003-ST but in this case the appellants have availed Cenvat credit.

Reasoning of Judgment:- The Tribunal found that merit in the contention of the appellants. It was held that the restriction as to admissibility of abatement with reference to non availment of cenvat credit applies to the service provider. The appellant is a service recipient of the GTA service and discharged the service tax in terms of Section 68(2) of the Finance Act, 1994. It was held that the appellant is entitled to abatement denied to it as per the impugned order. Reliance was placed on the judgment given in the case of Commr. of C. Ex., Rajkot Vs. Sunhill Ceramics Pvt. Ltd.

Decision:- Appeal allowed with consequential relief.

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PJ/Case Laws/2011-12/1156

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