COMMISSIONER OF CENTRAL EXCISE Vs. PUNJAB STEELS

JUDGEMENT

(1.) This order will dispose of the above mentioned three appeals, as common questions of law and facts are involved.

(2.) Briefly, the facts, as have been mentioned in the memo of appeal, are that the Respondent-Assessee is engaged in the manufacture of non-alloy steel ingots. It is registered under the Central Excise Act as well as for payment of service tax. Apparently finding that the Assessee contravened the provisions of Rule 3(5) of the Cenvat Credit Rules, 2004 (for short, 'the Rules') while not reversing the input credit on service tax paid on transportation of goods by road, the adjudicating authority vide order dated 13-10-2006 raised a demand of Rs. 2,75,684, besides imposing equal amount of penalty. The order was confirmed in appeal by the Commissioner (Appeals), Customs & Central Excise, Chandigarh. However, the Tribunal vide its order dated 25-6-2009 reversed the orders passed by the lower authorities and set aside the demand. It is against this order that the revenue is before this Court raising the aforesaid substantial question of law.

(3.) Learned Counsel for the revenue submitted that once the Assessee had reversed the Cenvat credit availed of on the goods purchased by him, which were brought in the factory but were disposed of without use or consumption, he was duty bound to reverse even the input credit availed of on account of service tax in respect of the transportation of goods. He referred to the provisions of Rule 3(5) of the Rules to submit that once the inputs or capital goods, on which Cenvat credit had been taken are removed as such from the factory, he is required to reverse the credit availed of to that extent even of service tax paid for availing transport services. Reliance was placed upon Rule 5 of the Rules, which deals with refund of Cenvat credit stating therein that when an Assessee is entitled to refund of the tax paid on inputs or input service, it is even bound to reverse the credit taken with respect to both things and cannot retain the benefit with regard to the input service while reversing the same with regard to excise duty of inputs.