COMMISSIONER CENTRAL EXCISE AND CUSTOMS Vs. PANCHMAHAL STEEL LTD.
HIGH COURT OF GUJARAT
COMMISSIONER CENTRAL EXCISE AND CUSTOMS
Panchmahal Steel Ltd.
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(1.) Revenue is in appeal against the judgment of Customs, Excise and Service Tax Appellate Tribunal, ('CESTAT' for short) West Zonal Bench at Ahmedabad dated 18th March 2014 raising the following questions for our consideration:
"(a) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in holding that there is no bar for payment of service tax from the cenvat account, and there is no legal restriction for utilization of cenvat credit for the purpose of payment of services, which is not their output service?
(b) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in allowing the Cenvat credit utilized by the respondent for the payment of service tax on Goods Transport Agency Service, which is not their output service? "
(2.) Briefly stated, the facts are that the assessee is engaged in the business of manufacturing excisable goods. The assessee is also liable to pay service tax for the goods transport agency service. The assessee utilized Cenvat credit arising out of manufacturing activities for payment of service tax of G.T.A. Service. The Revenue's stand was that such Cenvat credit could not have been utilized for service tax payable on G.T.A. Service, and that such tax ought to have been paid in cash. Ultimately when the issue reached the Tribunal, the Tribunal in the impugned judgment upheld the stand of the assessee placing reliance on the decision of Punjab and Haryana High Court in the case of Commissioner of Central Excise, Chandigarh Vs. M/s. Nahar Industrial Enterprises Ltd., 2012 25 STR 129. The Tribunal also placed reliance on the decisions of other High Courts, including in the case of Commissioner of Sales Tax Vs. Hero Honda Motors Ltd., 2013 29 STR 358. The Tribunal held and observed as under:
"4. In the above decisions, the Hon'ble High Courts have held that there is no bar for payment of service tax from the CENVAT Account and there is no legal restriction for utilization of CENVAT credit for the purpose of payment of service tax on GTA services. The Hon'ble High Court of Punjab & Haryana, in the case of Nahar Industrial Enterprises Limited , held as under:-
"7. Learned counsel for the revenue has contended that the respondents cannot pay the service tax from the Cenvat credit availed by them. But this argument has no force, because a perusal of Para 2.4.2 of CBEC's Excise Manual of Supplementary instructions shows that there is no legal bar to the utilization of Cenvat credit for the purpose of payment of service tax on the GTA service.
8. Apart from the above, even as per Rules 3(4)(e) of the Cenvat Credit Rules, 2004, the Cenvat credit may be utilized for payment of service tax on any output service.
9. In the present case also, the service tax was paid out of the Cenvat credit on GTA services and hence, the respondents were well within their right to utilize the Cenvat credit for the purpose of payment of service tax. The Commissioner (Appeals) as well as the Tribunal have rightly held that the respondents were entitled to pay the service tax from the Cenvat credit."
5. We find that the other High Courts have also taken the same view. In view of the above, the question referred to is answered in favour of the assessee."
(3.) Learned advocate Shri R.J. Oza for the Revenue submitted that the decision of Punjab and Haryana High Court in the case of M/s. Nahar Industrial Enterprises Ltd. has been carried in appeal, and such appeal was admitted and is pending.;
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