COMMISSIONER OF CENTRAL EXCISE Vs. NAHAR FIBRE

JUDGEMENT

(1.) THE brief facts of the case are that, the respondents herein were registered in the category of "Transport of goods by Road Service" ('GTA Service' in short) as person liable to pay Service Tax under Section 68 of the Finance Act, 1994. On scrutiny of ST -3 Returns filed for the half year ending March, 2005 and September, 2005, it was observed that they had paid Service Tax of Rs. 2,39,041 from Cenvat credit account maintained for central excise purpose for payment of duty on final products. The assessee was working under two capacities one Manufacturer and the other Service Tax assessee [Demand Service Tax assessee under Section 68(2)]. The inputs/input services/capital goods, which are used for manufacture of final product, were held as inputs/input services/capital goods for providing outward services in view of the definition thereof under Rule 2 of the Cenvat Credit Rules, 2004. The Department was, therefore, of the view that the Service Tax paid by the assessee on GTA Service from the Cenvat credit account was not proper and, therefore, a show -cause notice dated 16 -3 -2006 was issued for the recovery of the Service Tax wrongly paid from the Cenvat credit account maintained for central excise purpose together with interest. The notice also proposes imposition of penalty. Similarly, M/s. Nahar Fibres, a 100 per cent EOU, had utilized the Cenvat credit amounting to Rs. 3,59,239 during the period from March, 2005 to September, 2005 and show -cause notice was also issued on 16 -3 -2006 proposing similar action as proposed in the notice for recovery of Rs. 2,39,041. Both notices were adjudicated against the assessee; assessee came up in appeal against the confirmation of both demands which were set aside by the Commissioner (Appeals) by the impugned order relying upon the Tribunal's earlier Order No. 695/07 in their own case CCE v. Nahar Industrial Enterprises Ltd. . Hence this appeal by the revenue against the setting aside of both the demands.

(2.) I have heard both sides and find that the only ground raised in the appeal is that, the Tribunal's decision in Nahar Industrial Enterprises Ltd.'s case (supra) has been challenged by the revenue before the Hon'ble Punjab & Haryana High Court. However, this by itself is not sufficient to hold that the Commissioner (Appeals) has committed any error in following the precedent on the identical issue of the same assessee. In the impugned order, the Commissioner (Appeals) has reproduced the relevant portion from the Tribunal's judgment, which is reproduced as under for the better understanding of the issue in the dispute:

(3.) AS per the Cenvat Credit Rules and as per the Manual, there is no restriction for utilization of Cenvat credit by the manufacturing unit towards payment of Service Tax as service tax provider. In these circumstances, I find no infirmity in the impugned order, the appeal is dismissed. (p. 118)