BANGALORE OXYGEN CO. PVT. LTD. Vs. THE COMMISSIONER OF CENTRAL EXCISE (APPEALS)

JUDGEMENT

(1.) THIS appeal is filed by M/s. Bangalore Oxygen Co. Pvt. Ltd., Bangalore. The Appellant is engaged in manufacture and clearance of dissolved Acetylene Gas and Carbide Sludge. On audit of records of the Assessee, the internal audit of the department found that the Assessee had utilized CENVAT credit for payment of Service Tax on GTA service as a recipient of the said service during the period October 2003 to October 2007 to the tune of Rs. 80,934/ -. After due processes of law, the Original Authority had held that credit could not have been validity utilized to discharge Service Tax as a recipient of GTA. Hence the order demanding Service Tax, interest and equal amount of penalty as the tax demanded under Section 78 of the Finance Act, 1994 (the Act).

(2.) DURING hearing, the learned Counsel appearing for the Appellants submitted a copy of Final Order No. 226 -275/2011 dated 7.2.2011 in the case of M/s. Iswari Spinning Mills and 49 Ors. v. CCE, Madurai and Ors. As per the said Final Order, CENVAT credit earned could be utilized to discharge liability on GTA Service by the recipients of the said service up to 18.4.2006. However, such utilization with effect from 19.4.2006 was contrary to the legal provisions, since GTA Service was excluded from the definition of 'output service' contained in the Cenvat Credit Rules, 2004. It is argued that in terms of the Final Order, the Assessee's liability confirmed was not sustainable for the period up to 18.4.2006. As far as the period beyond 18.4.2006 is concerned, it is argued that the Assessee was under the bonafide belief that it could utilize CENVAT credit to discharge liability as a recipient of GTA Service. Therefore, the show cause notice basic to the proceedings dated 23.9.2008 was barred by limitation.

(3.) ON a perusal of the case records and rival submissions, I find that the learned Counsel has rightly relied on the Final Order cited in support of the claim that it could legally utilize CENVAT credit to discharge Service Tax due under the category of GTA as a recipient of the said service. This is the ratio of the Tribunal's decision in the case of CCE, Belgaum v. Shri Tubes and Steels Pvt. Ltd. 2011 TIOL 147 CESTAT BANG. Accordingly, it is held that the demand relating to the period up to 18.4.2006 is not sustainable. The same is set aside. In view of the changed legal position demand confirmed for the period from 19.4.2006 is sustained. However, considering that the dispute was not isolated, it is held that in the facts of the case, the Assessee could not be penalized in relation to the liability sustained. Accordingly, the appeal is allowed by way of remand to the Original Authority to re -determine the Assessee's liability. Appeal is disposed.