MMS STEELS LTD. Vs. CCE, TRICHY

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, I am of the view that the appeals require to be finally disposed of at this stage. Accordingly after dispensing with predeposit, I take up the appeals.

(2.) THE appellants are manufacturers of excisable goods. They pay service tax on Goods Transport Agency's Service (GTA service, for short) received in connection with inward movement of their inputs. They also pay similar tax on similar service received in connection with outward movement of their final products. In both the instances, they are service recipients. During the periods of dispute, which are prior to 19.4.2006, the appellants utilized credit of duty paid on inputs and capital goods as also credit of service tax paid on input service, for payment of duty of excise on final products as also for payment of service on GTA service. The utilization of input -duty credit, capital goods credit and/or input service tax credit for payment of service tax on GTA service was objected to by the department. The original authorities sustained this objection and demanded duty equivalent to the credit found to have been wrongly utilized. They also imposed penalties on the assessees. The first appellate authorities upheld the denial of credit to the assessees but vacated the penalties. The present appeals are directed against the orders of the appellate Commissioners.

(3.) AFTER considering the submissions of learned Counsel and learned SDR, I find that the short question arising for consideration in these cases is whether it was open to the assessees to utilize input -duty credit, capital goods credit and input service tax credit for payment of service tax on GTA service for the respective periods. This question requires to be settled with reference to Explanation to the definition of 'output service' under Rule 2(p) of the Cenvat Credit Rules, 2004. I find that this exercise was done in a similar case viz. R.R.D. Tex (P) Ltd. v. Commissioner of Service Tax, Salem (Appeal No. S/12/2007) and the issue was decided in favour of the assessee vide Final Order No. 606/2007 dated 18.5.2007. The relevant part of the said final order is reproduced below: