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PJ/Case Laws/2010-11/1018

Service tax on freight could be paid utilizing the cenvat credit?
Case: Andhra Pradesh Paper Mills Ltd v/s Commissioner of Central Excise, Visakhapatnam-II
 
Citation: 2007 (008) STR 0166 (Tri. - Bang.)
 
Issue:- Whether service tax on freight could be paid utilizing the cenvat credit?
 
Brief Facts:- For the period from 01.01.2005 to 30.09.2005, appellant paid the service tax on freight paid for the transportation of goods from Cenvat credit account. Revenue alleged that the appellant were required to pay the service tax in cash by TR-6 Challan as there is no provision for utilization of Cenvat credit for payment of Service tax on input service.
 
The Adjudicating Authority held that the inward transportation of goods by road service is an "input service" as provided in clause (ii) of Rule 2(1) of the Cenvat Credit Rules, 2004. Since in terms of Rule 3(4)(e) of the Cenvat Credit Rules, Cenvat credit may be utilized for payment of Service tax on any Output Service, the appellant is not entitled to utilise the Cenvat credit for payment. The Commissioner confirmed the demand with interest. Penalty under Section 76 was imposed. Penalty was also imposed under Rule 15 (3) of the CCR, 2004.
 
Reasoning of Judgment:- The Tribunal perused the definition of “Output service” given in Rule 2 (p) of the CCR, 2004 and held that in terms of the explanation contained in the said definition, the service on which the appellant pays Service tax will be deemed to be an 'output service', as the appellant is only a recipient of the transport of goods by road service. When the service is deemed to be an 'output service', the Service tax can be paid by way of Cenvat Credit in terms of Rule 3(4) (e) of the Cenvat Credit Rules.
 
Impugned order set aside.
 
Decision:- Appeal allowed.
 
Comments:- This is a very good decision as prior to recent Notification the GTA service was treated as deemed output service and so Cenvat credit can be utilized for its payment. 

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