SOUTHERN AGRIFURANE INDUSTRIES Vs. CCE (ST)

JUDGEMENT

(1.) IN the instant case the applicant M/s. Southern Agrifurane Industries Ltd., utilized cenvat credit for discharging liability towards GTA service received for bringing in raw materials etc. to their factory. During the period 1.1.05 to 30.9.05 they had utilized a total credit of Rs. 1,47,182/ -. The department objected to utilizing the cenvat credit for meeting the liability towards input service. After due process of law the credit utilized was demanded under Section 73 of the Finance Act, 1994, interest thereon and imposed penalties under Section 76 of the Finance Act, 1994 and Rule 15(3) of Cenvat Credit Rules, 2004 (CCR).

(2.) MOVING the application the Ld. Counsel for the appellants submits that as per the definition contained in 2 (r) of CCR, provider of taxable service included a person liable for paying the service tax and as per Clause (d) of Rule 2(1) of Service Tax Rules 1994, the appellant being a recipient of GTA service was to be deemed as provider of taxable service. It is argued that as per Clause (p) of Rule 2 of CCR any taxable service provided by the provider of taxable service, was output service. A conjoint reading of these provisions led to an inference that the impugned GTA service, the liability to which was discharged using cenvat credit was in accordance with the provisions of CCR. Rule 3(4) of CCR allowed the utilization of cenvat credit for payment of service tax on any output service. The Ld. Counsel also cites the following case law in support of his claim:

(3.) I have also heard the Ld. SDR. She submits that as per the explanation under Rule 2(p) of CCR, if a person liable for paying service tax does not provide any taxable service or does not manufacture any final product, then alone the service for which he is liable to pay service tax shall be deemed to be output service. In the instant case, the appellant is a manufacturer of final products. Therefore, GTA service availed by it for receiving inputs into its factory cannot be deemed to be output service. Therefore the impugned order has been passed in accordance with law.