Custom, Excise & Service Tax Tribunal
Cce, Salem vs M/S. Erode Annai Spinning Mills (P) Ltd on 12 December, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
ST/70/2009 and S/CO/7/2009
(Arising out of Order-in-Appeal No. 153/2008 (SLM) ST dated 29.10.2008 passed by the Commissioner of Customs and Central Excise (Appeals), Salem)
For approval and signature:
Honble Shri Mathew John, Technical Member
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
CCE, Salem Appellant
Vs.
M/s. Erode Annai Spinning Mills (P) Ltd. Respondent
Appearance Ms. Indira Sisupal, AC (AR) for the Appellant Shri K.S. Venkatagiri, Advocate for the Respondent CORAM Honble Shri Mathew John, Technical Member Date of Hearing: 12.12.2013 Date of Decision: 12.12.2013 Final Order No. 40626/2013 The respondent is a manufacturer of cotton yarn. They had received services of Goods Transport Agency. As a recipient of the said service they paid service tax on such services as per provisions of Rule 2(1)(d)(iv) of Service Tax Rules,1994. The respondent was utilizing the CENVAT credit for discharging the tax liability under Rule 2(1)(d)(iv). Revenue was of the view that CENVAT credit could be utilized for payment of service tax on their output service only and not for payment of tax on services received by them which is in the nature of input service. Based on such reasoning, a show-cause notice for recovery of service tax paid through CENVAT credit to the extent of Rs.3,93,434/- during the period January 2005 to May 2006 was issued. On adjudication, the said amount was confirmed along with interest and penalties. Aggrieved by the order, the respondents filed an appeal before the Commissioner (Appeals). Commissioner (Appeals) upheld the utilization of CENVAT credit upto 18.4.2006 when the Explanation to Rule 2(p) was omitted. For the remaining period, the Commissioner (Appeal) upheld the demand and the same was paid by the respondent. Revenue is in appeal against the order of the Commissioner (Appeals) dropping the demand for the amount of tax paid through CENVAT credit from January 2005 till 18.4.2006.
2. Arguing for the Revenue, the learned AR submits that as per the CENVAT Credit Rules, the credit can be utilized only for paying duty on output service. The service in question is an input service and therefore they could not have utilized the credit for paying service tax liability as a recipient of the service. Explanation to Rule 2(p) only was to make it clear that the receiver of service also has to comply with the CENVAT Credit Rules just as applicable to provider of output service. She relies on the decision of the Tribunal in the case of M/s. Iswari Spinning Mills & 49 Others Vs. CCE, Salem &Ors. Vide Final Order Nos.226 to 275/2011 dated 4.2.2011.
3. She submits that the order of the Commissioner (Appeals) is not proper and adjudication order may be re-stored.
4. Opposing the prayer the learned Advocate for the respondent submits that in the decision relied upon by the AR for Revenue in para 7 of the order reads as under:-
7. As regards the period prior to the amendment to CENVAT Credit Rules made on 19.4.2006, i.e. for the period up to 18.4.2006, the assessee-appellants / assessee-respondents are entitled to utilize CENVAT credit for paying service tax on GTA service. Hence for the period inclusive and upto 18.4.2006, the tax demand along with demand of interest and penalties, wherever imposed are set aside in respect of these 50 appeals.
5. Further the above position has been affirmed by the Honble Madras High Court and the Honble Karnataka High Court in the following decisions:-
(a) CCE, Salem Vs. M/s. Cheran Spinners Ltd. 2013-TIOL-665-HC-MAD-ST
(b) Commissioner of Service Tax, Bangalore Vs. Aravind Fashions Ltd. 2012 (25) STR 583 (Kar.)
6. He submits that in view of the decisions of these High Courts, the appeal filed by the Revenue is not maintainable.
7. The learned A. R. for Revenue submits that Revenue has filed appeals in the Supreme Court against the decisions as mentioned in para 5 and 6 of the order in the case of Cheran Spinners (Supra).
8. I have considered submissions of both sides. In view of the decisions of the Honble High Courts cited by the learned Advocate for the respondent, I dismiss the appeal filed by the Revenue. The cross-objection filed by the respondent also gets disposed of.
(Dictated and pronounced in open court) (Mathew John) Technical Member Rex 2