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Aquapharma Chemicals Pvt. Ltd. Versus Commissioner of Central Excise, Raigad

2015 (12) TMI 1452 - CESTAT MUMBAI

Utilization of CENVAT Credit to pay service tax under reverse charge - levy of service tax on import of services u/s 66 A of the Finance Act 1994 - Held that:- Plain reading of the said sub-Rule 4 of Rule 3 of CCR indicates that Cenvat Credit may be utilized for the payment of service tax on any output service. We find from the provisions of Rule 2(r), which provides that "provider of taxable service" includes person who liable for paying service tax; Rule 2(p) provides that "output service" mea .....

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sustainable. The impugned order is set aside - Decision in the case of TATA AIG Life Insurance (2014 (4) TMI 637 - CESTAT MUMBAI) and Panchmahal Steel Ltd. (2014 (12) TMI 876 - GUJARAT HIGH COURT) followed - Decided in favour of assessee. - Appeal No. ST/283/11 - Dated:- 5-8-2015 - M. V. Ravindran, Member (J) And C. J. Mathew, Member (T) For the Appellant : Ms Aparna H, Adv For the Respondent : Shri S V Nair, Supdt. (AR) ORDER Per M V Ravindran 1. This appeal is directed against order-in-appeal .....

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at appellant should have paid the service tax liability in cash and could not have utilized the Cenvat Credit. Both the lower authorities have held that appellant has to pay the amount in cash coming to the said a conclusion demand was confirmed along with interest and penalties were imposed. 3. Learned Counsel would take us through the provisions of Cenvat Credit Rules more specifically Rule 3 (4) (e) and submit that Cenvat credit may be utilized for payment of service tax of any output service .....

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is on the basis of reveres charge mechanism. He would submit that appellant has not provided any output service but have paid the service tax as a deemed output service provider. He would submit that the impugned order is correct and relies upon the Tribunal's order in the case of Adishiv Forze Ltd.-2008 (9) STR 534. 5. We have considered the submission made at length by both sides and perused the records. 6. The issue involved in this case is whether the appellant is correct in utilizing th .....

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of the Finance Act 1994. 8. We have perused the provisions of rule to 3 (4) of the Cenvat Credit Rules 2004. Plain reading of the said sub-Rule 4 of Rule 3 indicates that Cenvat Credit may be utilized for the payment of service tax on any output service. We find from the provisions of Rule 2(r), which provides that "provider of taxable service" includes person who liable for paying service tax; Rule 2(p) provides that "output service" means taxable service provided by the pro .....

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ce (supra). We reproduce the relevant paragraphs. "5. We have carefully considered the submissions made by both sides. 5.1 Prior to 19-4-06, Rules 2(p), (q) and (r) read as follows :- "(p) "output service" means any taxable service provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions 'provider' and 'provided' shall be construed accordingly. Explanation - For r .....

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vice Tax." w.e.f. 19-4-06, the provisions stood as follows :- "(p) "output service" means any taxable service provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions 'provider' and 'provided' shall be construed accordingly. (q) "person liable for paying Service Tax" has the meaning as assigned to it in clause (d) of Sub-Rule(l) of Rule 2, of the Service .....

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n liable for paying Service Tax' remain the same. Since in the case of Insurance Auxiliary Service, the liability to pay Service Tax is on the service recipient in terms of Rule 2(l)(d)(iii) of the Service Tax Rules, 1994, the appellants are the providers of the output service as defined in law. Therefore, the appellants are entitled to avail Cenvat Credit on the input services used for providing the output service. Consequently, there is no bar in utilization of Cenvat Credit for payment of .....

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iability in cash as they were only recipient of Service and not the provider on the ground that a fiction has been created under Section 68(2) of the Finance Act, 1994 deeming the service recipient as a service provider and, therefore, such legal fiction has to be given full effect. Similarly, in the case of Kansara Modler Ltd. (supra) this Tribunal has held as follows :- "If we read Rule 2(q) of Cenvat Credit Rules with Rule 2(l)(d)(iv), we find that appellant is a person liable to Service .....

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t as output service provider, is not correct and accordingly we set aside the impugned order and allow the appeal." 5.3 In view of the above decisions of the various High Courts, the decisions of the Tribunal relied upon by the Revenue become irrelevant. Accordingly, we hold that the appellants in present appeals were entitled to utilize Cenvat Credit of the Service Tax paid on various input services for discharge the Service Tax liability on the output service of "Insurance Auxiliary .....

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