Custom, Excise & Service Tax Tribunal
M/S.Uflex Limited, Noida vs Cce & St, Noida on 10 August, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-SM
COURT IV
Service Tax Appeal No.ST/1399/2011 ST. [SM]
[Arising out of Order-in-Appeal No. 104/ST/APPL/NOIDA/11 dated 30.05.2011 passed by the Commissioner (Appeals), NOIDA].
For approval and signature:
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
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 Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s.Uflex Limited, NOIDA Appellant
Vs.
CCE & ST, NOIDA Respondent
Present for the Appellant : Shri. Arvind Arora, Advocate
Present for the Respondent: Shri R.K. Mishra, D.R.
Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
Date of Hearing/Decision: 10.08.2015
FINAL ORDER NO. 54070/2015
PER: S.K. MOHANTY
This appeal is directed against the impugned order dated 30th May 2011 wherein the Commissioner (Appeals) has upheld the demand of interest confirmed against the appellant vide Order-in-Original dated 15.01.2011 in terms of Section 75 of Finance Act, 1994.
2. Brief facts of the case are as follows:-
3. The appellant is engaged in the manufacture of printing ink, adhesive etc. falling under Tariff Heading No.3215 and 3506 of the first schedule to the Central Excise Tariff Act, 1985. The appellant availed Cenvat Credit on GTA service for inward as well as outward transportation of goods and also discharged service tax liability thereon in the capacity of a person liable to pay service tax in terms of the provisions of section 68 (2) of the Finance Act 1994 read with rule 2 (1) (d) (v) of the Service Tax Rules 1994 (Reverse charge mechanism). For payment of service tax, the appellant utilized the amount available in the cenvat account. Payment of tax on such GTA service through the cenvat account was objected by the Service Tax Department. Subsequently, the appellant paid the amount by cash. The adjudication order passed in this regard in confirming the interest liability was upheld by the Commissioner (Appeals). Hence, the present appeal is before this Tribunal.
4. Ld. Advocate Shri Arvind Arora appearing for the appellant submits that the period involved in the present case is from January, 2005 to August, 2006 and covered by the un-amended provisions of the Cenvat Credit Rules, 2004 In the definition of output service, the exclusion to the GTA service was not finding place, which was put in to the statute book only w.e.f. 01.03.2008. He further submits that since Rule 3 (4) clearly provides that cenvat credit may be utilized for payment of service tax on any output service, denial of utilization of GTA service in this case is not proper, since there is no stipulation/prohibitions contained in the said sub-rule (4) of Rule 3 of Cenvat Credit Rules. To justify his stand that GTA service tax liability can be discharged by debiting the cenvat account, the ld. Advocate has relied on the judgment of Honble Punjab & Haryana High Court in the case of Commissioner of Central Excise, Chandigarh vs. Nahar Industrial Enterprises Ltd. reported in 2012 (25) STR 129 (P & H) and the Honble Himachal Pradesh High Court judgment in the case of Commissioner of Central Excise, vs. Auro Spinning Mills reported in 2012 (26) STR 413 (H.P.).
5. Per contra, Shri R.K. Mishra, the ld. DR appearing for the respondent submits that since the appellant had deposited the service tax attributable to the GTA service after the due date through TR-6 challan, as per the provisions of section 75 of the Finance Act 1994 the interest liability is automatic and the appellant is statutorily required to pay the interest for delayed payment of service tax.
6. I have heard the ld. Counsel for both sides and perused the records.
7. It is an admitted fact on record that the appellant had initially paid from the cenvat account for payment of service tax attributable to the GTA service for movement of both inward and outward transportation of goods. However, since the Department insisted for making the payment of service tax in cash, the appellant had deposited the service tax attributable to the GTA service through their PLA account. The Department in the present case had confirmed the interest liability for the delay in making payment of service tax in terms of Section 75 of the Finance Act 1994.
8. The term output service has been defined in Rule 2 (p) of the Cenvat Credit Rules, 2004. It was amended w.e.f. 01.03.2008 vide Notification No.10 of 2008/C.E. - (N.T.) dated 01.03.2008. The effect of the amendment was that taxable service referred to in clause (zze) of clause 105 of Section 65 of the Finance Act i.e. the GTA service was excluded from the purview of output service. Since the period involved in the present case is from January, 2005 to August, 2006, the said amended provisions of output service will have no application and as per the unamended provisions effective upto 28th February 2008, the GTA service was falling within the purview of the output service. Rule 3 (4) of the Cenvat Credit Rules permits utilization of cenvat credit towards payment of service tax on any output service. On conjoint reading of the provisions of un-amended Rule 2 (p) and Rule 3 (4) of the Cenvat Credit Rules, 2004 reveals that GTA service tax liability can be discharged on utilization of cenvat credit taken by the appellant. However, the said utilization has been specifically excluded w.e.f. 01.03.2008. The issue arising out of the present dispute is no more resintegra in view of the judgment of Honble Punjab and Haryana High Court in the case of Nahar Industrial Enterprises Ltd. (supra) wherein the Honble High Court have held as follows:-
7.?Learned counsel for the revenue has contended that the respondents cannot pay the service tax from the Cenvat credit availed by them. But this argument has no force, because a perusal of para 2.4.2 of CBECs Excise Manual of Supplementary Instructions shows that there is no legal bar to the utilisation of Cenvat credit for the purpose of payment of service tax on the GTA services.
8.?Apart from the above, even as per Rule 3(4)(e) of the Cenvat Credit Rules, 2004, the Cenvat credit may be utilized for payment of service tax on any output service.
9.?In the present case also, the service tax was paid out of the Cenvat credit on GTA services and, hence, the respondents were well within their right to utilize the Cenvat credit for the purpose of payment of service tax. The Commissioner (Appeals) as well as the Tribunal have rightly held that the respondents were entitled to pay the service tax from the Cenvat credit.
10.?In view of the above, the question of law posed in these appeals is answered in favour of the assessee and against the revenue. We find no merit in these appeals and the same are accordingly dismissed.
9. Further the issue regarding utilization of cenvat credit has also been settled by the Honble Himachal Pradesh High Court in the case of Auro Spinning Mills (Supra) wherein by relying on the judgment of Honble Punjab & Haryana High Court in the case of Nahar Industrial Enterprises Ltd. (supra), the Honble Himachal Pradesh High Court have held that as per Rule 3 (4)(e) of Cenvat Credit Rules, 2004 the cenvat credit may be utilized for payment of service tax on any output service. Since goods transport agency (GTA) is an output service as per the un-amended provisions of Rules, the cenvat credit utilized by the appellant for payment of GTA service tax is in conformity with the Service Tax Rules, 1994.
10. Since the service tax attributable to the GTA services has been paid through the cenvat account within the stipulated time frame prescribed under the Service Tax Rules, 1994, Section 75 of the Finance Act, 1994 cannot be invoked, justifying imposition of interest on the appellant in view of the fact that there was no delay in payment of service tax. As an abundant precaution, the appellant decided in reversing the cenvat credit and to pay the service tax through PLA. The payment of service tax through PLA is not the determining factor in the present case for computation of the period of delay, as because, the payment of service tax has been made within the stipulated time frame by debiting the cenvat account. Therefore, the impugned order confirming the interest liability on the ground of delayed payment of service tax is set aside. The appeal is allowed in favour of the appellant.
(Dictated and pronounced in the open Court) (S.K. MOHANTY) MEMBER (JUDICIAL) Anita ??
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