STURDY INDUS. LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS is an application for waiver from the requirement of pre -deposit of Service tax demand of Rs. 1,21,445/ - and penalty of Rs. 1,000/ - under Section 77 upheld by the Commissioner (Appeals) vide order -in -Appeal No. 3 -4/ST/APPL/CHD -II/09 dt. 30 -4 -09.

(2.) THE Appellants are engaged in the manufacture of excisable goods namely ACC sheets, chargeable to Central Excise Duty. They also availed Cenvat credit of Central Excise Duty paid on various inputs and of service tax paid on various input services. One of the input service used in GTA service in respect of which, in terms of Notification issued under Section 68(2) of the Finance Act, 1994, read with Rule 2(1)(d)(v) of the Service Tax Rules, 1994, the service tax is paid by the Appellant as the service receiver. It was further found that service tax amounting to Rs. 1,21,445/ - on GTA service received by them was paid through Cenvat credit instead of being paid through PLA, while as per the Cenvat Credit Rules, 2004, the Cenvat credit could be utilized only for the payment of duty on finished goods or output service. The Department was of the view that GTA service, which was availed for transportation of the inputs upto the Appellant's factory, cannot be treated as their "output service", just because the Appellants, as per the provisions of the notification issued under Section 68(2) of Finance Act, 1994, read with Rule 2(1)(d)(v) of Service Tax Rules, 1994, are required to pay the service tax in respect of the same. It is on this basis that a show cause notice dt. 17 -6 -09 was issued to the Appellant for recovery of allegedly non paid service tax amounting to Rs. 1,21,445/ - alongwith interest and also for imposition of penalty on them under Section 76. The show cause notice was adjudicated by the Asstt. Commissioner vide order -in -original dt. 12 -9 -09 by which the service tax demand of Rs. 1,21,445/ - was confirmed under Section 73 of the Finance Act, 1994 alongwith interest under Section 75 ibid and while no penalty was imposed under Section 76, penalty of Rs. 1,000/ - was imposed under Section 77 for not filing the service tax -3 return by the due date. On appeal to Commissioner (Appeals), Commissioner (Appeals) vide order -in -appeal Nos. 3 -4/ST/Appl/CHD -II/2009 dt. 30 -4 -09 upheld the Asstt. Commissioner's order. It is against this order that the present appeal and stay application have been filed.

(3.) I have carefully considered the submissions of the Appellant in their letter dt. 15 -4 -10 and also the grounds of appeal and also the submission made by the learned Dr. The service tax on the GTA service is required to be paid by the service receiver only in terms of the Notification issued under Section 68(2) of the Finance Act, 1994 read with Rule 2(1)(d)(v) of Service Tax Rules and just because the service recipient is required to pay service tax on GTA service, this service, which is actually provided by the Goods Transport Agent, cannot become the output service of the service receiver. Prima facie, therefore, I am inclined to agree with the Board's circular. Therefore, notwithstanding the fact that this issue is pending before a Larger Bench, in the case of Panchmahal Steel Ltd v. CCE, Vadodara -II reported in : 2008 (12) S.T.R. 447 I am of the view that this is not a case for total waiver. The Appellants are directed to pay an amount of Rs. 60,000/ - within a period of eight weeks from the date of this order. Compliance to be reported on 26 -7 -2010. On deposit of this amount within the stipulated period, the requirement of pre -deposit of remaining service tax demand, interest and penalty shall stand waived and recovery thereof stayed.