TMI Blog2011 (9) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant Shri.Prasad Paranjape, Advocate for respondent Per: P.R. Chandrasekharan 1. The present appeal is directed against the order-in-appeal No.YDB/68/RGD/2009 dated 11/09/2009 passed by Commissioner of Central Excise Customs (Appeals), Mumbai-II wherein he has set aside the order of the Additional Commissioner of Central Excise, Raigad, and allowed the appeal filed by the respondent in this case, M/s.Echjay Forgings Pvt Ltd., Khopoli, Raigad District. 2. Briefly stated the facts of the case are as follows:- 2.1 M/s.Echjay Forgings Pvt Ltd., (assessee in short) are manufacturers of iron and steel products falling under chapter heading 73 of the schedule to the CETA, 1985. They are also registered with the department for service tax for the services Transport of Goods by Road as defined under Section 65 (50b) of the Finance Act, 1994. During the period from October 2005 to September 2006, the respondents were liable to pay service tax on the Goods Transport Agency service as a recipient of the service, in terms of the provisions of Section 68 (2) of the Finance Act, 1994. The respondent did not discharge the service tax liability in cash but utilized Cenv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar issue arose in Parchmahal Steel Ltd., Vs. CCE, Vadodara-II, reported in 2008 (12) STR 447 (Tri-Ahmd.), wherein in view of the conflicting views between the Member (Judicial) and the Member (Technical), the matter was referred to Larger Bench for resolution of the dispute, which is still pending and, therefore, it will be appropriate to await the decision of the Larger Bench in the matter for considering the present appeal. The Ld. Counsel also relies on the judgement of the Tribunal in the case of Andhra Pradesh Paper Mills Ltd., Vs. CCE, Vishakapatnam, reported in 2007 (8) STR 166 (Tri-Bang) wherein it was held that payment of service tax for transportation of goods for the period from 1/1/2005 to 30/09/2005 through adjustment in Cenvat credit account was permissible even though the appellant was only a recipient of the transport of goods by road service. The Ld. Counsel also relies on the similar judgement of the Tribunal in the case of Bhushan Power Steel Ltd., Vs. CCE, BBSR-II, reported in 2008 (10) STR 18 (Tri-Kolkata). The Counsel further submits that the hon ble Allahabad High Court in Xerox India Ltd., Vs. CCE, Meerut-II, reported in 2011 (270) ELT 651 (All.) has he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different and distinguishable. The appellant herein is a manufacturer of iron and steel products and received the various inputs by road transport and on such receipt of service of goods by road, he was liable to pay service tax on the service of goods transport agency as recipient of service, in view of the provisions of Section 68 (2) of the Finance Act, 1994. The mere receipt of service and payment of service tax thereon does not make the recipient a provider of the output service for the period prior to 19/04/2006. In view of the explanation to Rule 2 (p) of the Cenvat credit Rules, a service on which tax has been paid by the recipient of the service is deemed to be an output service. Even though the service is deemed to be an output service that does not make the recipient of the service, a provider of the output service in the absence of another deeming provision. Further to utilize Cenvat credit two conditions are required to be satisfied (i) the inputs or input services should have suffered duty/tax and (ii) such inputs or input service should be utilized in the manufacture of dutiable final products or in the provision of a taxable output service. Further under Rule 3 (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m on which they are liable to pay Service tax as service recipient can not be treated as their output service and Service tax on the same will have to be paid by cash, not by utilizing input/capital goods duty credit or Service tax credit, as Rule 3(4) of the Cenvat Credit Rules, 2004 permits utilization of Cenvat credit for payment of central excise duty on dutiable final products or payment of Service tax on taxable output service. In fact, for the persons of category (a), the taxable service received by them, even if the duty liability on the same is required to be discharged by them, would be their input service, in respect of which they can avail Cenvat credit and use the same for payment of duty on their final product being manufactured by them or for paying Service tax on taxable output service being provided by them. 8.1.1As regards the persons of category (b) to which the Appellant belong, even though during period prior to 19-4-2006, by virtue of explanation to Rule 2(p), the service received by them, on which they are liable to pay tax under Rule 2(1)(d) of Service Tax Rules, 1994, is deemed to be their output service , they could not take Service tax credit in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provision of Section 68(2) of the Finance Act, 1994 read with Rule 2(1)(d) of the Service Tax Rules, 1994, could not be treated as his output service . Thus, during the period w.e.f. 19-4-2006, irrespective of whether the appellant were providing any taxable output service or manufacturing some final products or were not manufacturing any final products or providing any taxable output service, in respect of the GTA service received by them, they were required to pay Service tax in cash, not through the credit account. 6. A plain reading of the above order makes it absolutely clear that neither prior to 19/04/2006 nor after 19/04/2006, in respect of persons providing same taxable output service and/or manufacturing dutiable final products, the taxable service received by them on which they were liable to pay service tax as service recipient under the provisions of Section 68 (2) of the Finance Act, 1994 read with Rule 2 (1) (d) of the Service Tax Rules, 1994 could be treated as their output service and, therefore, Service tax on the same was required to be paid in cash and not by utilizing Cenvat credit. The case laws cited by the Advocate for the respondent has not considered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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