Pradip Kumar Das, J.
1. The relevant facts of the case, in brief, are that the assessee is engaged in the manufacture of excisable goods namely Motorcycles. and also registered with the service tax department for payment of service tax under the category of "Goods Transport Agency Service". The assessee was discharging service tax on GTA service from their cenvat credit account. A show cause notice dt. 23-11-07 was issued alleging that the assessee is the manufacturer of excisable goods and not providing any output service and therefore they are not eligible to use cenvat credit for discharging service tax on GTA service. The assessee is liable to discharge service tax on GTA service by cash. Hence, it was proposed to demand an amount of Rs.10,27,257/- along with interest and penalty for the period April 2006 to January 2007. The adjudicating authority confirmed the demand of service tax of Rs.10,27,257/- along with interest under Section 73 (1) of the Finance Act, 1994 and disallowed the cenvat credit of Rs.10,27,257/- under Rule 14 of the CCR 2007 utilized towards the payment of tax and imposed penalty. Commissioner (Appeals) modified the adjudication order in so far as the demand of tax was restricted for the period from 19.4.2006 to January 2007 along with interest. Penalty was waived by invoking Section 80 of the Finance Act, 1994. The assessee filed appeal before the Tribunal against the demand of tax along with interest for the period from 19.4.2006 to Jan'07. Revenue also filed appeal against setting aside the demand of tax prior to 19.4.2006 and waiver of penalty.
2. The Learned Advocate on behalf of the assessee submits that the Commissioner (Appeals) erroneously proceeded on the basis that the Explanation to Rule 2(p) of Service Tax Rules 2004 was deleted vide Notification No.8/2006-CE (NT) dt. 19.4.2006 and thereafter the assessee is not eligible to avail cenvat credit for discharging the tax liability on GTA service. He submits that on harmonious reading of Rule 2(p), 2(q) and 2(r), it is clear that there is no restriction to discharge service tax on GTA service from cenvat credit account. He submits that GTA service is covered in sub-clause (zzzp) of clause (105) of Section 65 of the Finance Act. By Notification No.10/08-CE (NT) dt. 1.3.2008, sub-clause (zzzp) of clause (105) of Section 65 of the Finance Act, 1994 was specifically excluded from the definition of "output service" under Cenvat Credit Rules, 2004. In this context, he relied upon the following decisions of the Tribunal :-
1).Indian Acrylic Ltd. Vs CCE Chandigarh - 2012 (28) STR 354 Vs (Tri-Del.)
2). Topland Exports Vs CCE Rajkot - 2012 (28) STR 177 (Tri.-Ahmd.)
3.1Ld. advocate submits that various High Courts had decided that there is no legal bar to the utilization of cenvat credit for the purpose of payment of service tax on GTA service as per para 2.4.2 of CBEC's Excise Manual of Supplementary Instructions. He also relied upon the following decisions :-
i). CCE Chandigarh Vs Nahar Industrial Enterprises Ltd. 2012 (25) STR 129 (PandH)
ii).CST Vs Hero Honda Motors Ltd. - 2013 (29) STR 358 (Del.)
iii).CST Bangalore Vs Aravind Fashions Ltd. - 2012 (25) STR 583 (Kar.)
iv). CCE Vs Auro Spinning Mills - 2012 (26) STR 413 (HP)
v).CCE Chandigarh Vs Deepak Spinners Ltd. - 2013 (32) STR 531 (H.P)
vi).CCE Salem Vs Cheran Spinners Ltd. - 2013-TIOL-665-HC-MAD-ST
In view of the above, learned advocate submits that the impugned order in so far as demand of tax and interest is liable to be set aside.
4. The Learned Authorized Representative on behalf of the Revenue submits that the Commissioner (Appeals) erroneously set aside the demand prior to 19.4.2006 following the amendment of Explanation to Rule 2(p) of Cenvat Credit Rules, 2004. He submits that the assessee is not providing any output service of GTA but they are only recipient of the GTA service. By virtue of Rule 2(1) (d) (iv) of Service Tax Rules,1994 they have been deemed as 'service provider' for the purpose of discharging service tax. So, they are not actual service provider and hence GTA service is not an 'output service' within the definition of Rule 2(p) of CCR. He submits that the Explanation to Rule 2(p) of the Rules 2004 is a deeming provision in respect of payment of service tax. It is settled law that legal fiction created for a particular purpose cannot be extended to other areas. He submits that they are the manufacturer of excisable goods and therefore they cannot be deemed to be an output service provider. In this context, he relied upon the decision of the Hon'ble Supreme Court in the case of Saraswati Sugar Mills Vs CCE Delhi - 2011 (270) ELT 465 (SC) and also Hon'ble Madras High Court's decision in the case of BAPL Industries Ltd. Vs UOI 2002 (211) ELT 23 (Mad.)
4.1.. With regard to appeal filed by assessee, Ld. AR submits that the Tribunal in the case of Gimatex Industries Pvt. Ltd. Vs CCE Nagpur - 2012 (25) STR 456 (Tri.-Mum.) has held that payment of service tax on GTA through cenvat credit account was not eligible for the period beyond 18.4.2006. He also relied upon the decision of Iswari Spinning Mills Vs CCE - 2011 (22) STR 549 (Tri.-Che.) and ITC Ltd. Vs CCE Guntur 2011 (23) STR 41 (Tri.-Bang.).
In view of the above, Ld. AR submits that the appeal filed by the assessee is liable to be dismissed and the appeal filed by Revenue is to be allowed.
5. After hearing both sides and on perusal of the records, I find that the issue involved is as to whether the assessee, manufacturing excisable goods is eligible to discharge service tax liability on GTA service from their cenvat credit account or by cash during the period April 2006 to January 2007. For the purpose of proper appreciation of the case, it is appropriate to reproduce the relevant provisions of the Cenvat Credit Rules, 2004 as under :-
(a). The definition of "input service" under Rule 2 (p) as it stood prior to 19.4.2006 is as under :-
(p).output service means any taxable service provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions 'provider' and 'provided' shall be construed accordingly;
Explanation. For the removal of doubts it is hereby clarified that if a person liable for paying service tax does not provide any taxable service or does not manufacture final products, the service for which he is liable to pay service tax shall be deemed to be the output service,
(q). Person liable for paying service taxhas the meaning as assigned to it in clause (d) of sub-rule (1) of rule 2 of the Service Tax Rules, 1994;
(r). Provider of taxable serviceinclude a person liable for paying service tax;"
(b). By Notification No.8/2006-CE (NT) dt. 19.4.2006 Explanation to Rule 2(p) was omitted.
c).By Notification No.10/2008-CE(NT) dt. 1.3.2008, Rule 2(p) was substituted as under:-
"(p). output servicemeans any taxable service, excluding the taxable service referred to in sub-clause (zzp) of clause (105) of section 65 of the Finance Act, provided by the provider of taxable service, to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions 'provider' and 'provided' shall be construed accordingly;"
d). Rule (3) (4) of Cenvat Credit Rules, 2004 is as under:-
Rule 3. CENVAT Credit . (1) xxx xxx xxx (4). The CENVAT credit may be utilised for payment of
(a). xxx xxx xxx xxx xxx
(e). service tax on any output service"
e).Section 68 (2) of Finance Act, 1994 provides payment of service tax as under :-
"(2). Notwithstanding anything contained in sub-section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service."
f). Rule 2 (1) (d) (v) of Service Tax Rules, 1994 defines "person liable for paying service tax" means as under :-
"(v) in relation to taxable service provided by a goods transport agency, where the consignor or consignee of goods is,
(a). any factory registered under or governed by the Factories Act, 1948 (63 of 1948);
(b). any company formed or registered under the Companies Act, 1956 (1 of 1956)
(c). any corporation established by or under any law;
(d). any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India;
(e). any co-operative society established by or under any law;
(f).any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 194) or the rules made thereunder; or
(g) anybody corporate established, or a partnership firm registered, by or under any law, any person who pays or is liable t pay freight either himself or through his agent for the transportation of such goods by road in a goods carriage."
6. In the impugned order, Commissioner (Appeals) following the decision of the Tribunal in the case of India Cements Ltd. Vs CCE Salem 2007 (7) STR 569 (Tri.-Chennai) held that by virtue of the Explanation to Rule 2(p), it shall deemed to be "output service". It has been observed that the Explanation was deleted vide Notification No.8/2006-CE (NT) dt. 19.4.2006 and therefore the assessees are liable to discharge service tax on GTA service by cash from 19.4.2006. Revenue in their grounds of appeal stated that Tribunal has taken a wrong decision based on the Explanation given to Rule 2(p) of the Rules 2004 and they have filed appeal against the decision of India Cements Ltd. (supra) before the Hon'ble High court. It is seen that Hon'ble Madras High Court in the case of Cheran Spinners Ltd. (supra) on the same issue for the period between 1.1.2005 and 30.9.2005 dismissed the appeal filed by Revenue holding that CENVAT credit can be used to pay service tax due on G.T.A service.
7. The Ld AR on behalf of Revenue strongly relied upon the decision of the Tribunal in the case of ITC Ltd. (supra) which related to the period from April 2005 to March 2007. I find that the Hon'ble Madras High Court had already decided in the case of Cheran Spinners Ltd. (supra) rejecting the Revenue's appeal for the period prior to 19.4.2006. Hence I do not find any merit in the appeal filed by the Revenue.
8. Regarding the appeal filed by the assessee, I find that in view of the Notification No.10/08-CE (NT) dt. 1.3.2008, GTA service was excluded from the definition of "output service" under Rule 2(p) of the Cenvat Credit Rules, 2004 and therefore, they are eligible to utilize cenvat credit for payment of service tax on GTA service prior to 1.3.2008. The Ld. Advocate strongly relied upon the decision of the Division Bench of the Tribunal in the case of Shree Rajasthan Syntex Ltd. Vs CCE Jaipur 2011 (24) STR 617 (Tri.-Del.) . In that case, the Tribunal distinguished the decision in the case of ITC Ltd. (supra) and observed that the assessee is eligible to utilize cenvat credit for payment of service tax on GTA service prior to issue of notification No.10/08-CE (NT) dt. 1.3.2008. The relevant portion of the said decision is reproduced below :-
"3. After hearing the learned DR, we find that the issue is no more res integra and stands settled by various decisions of the Tribunal, which also stands confirmed by the Honble High Court of Punjab and Haryana. The Tribunal in the case of Commissioner of Central Excise, Nagpur v. Visaka Industries Ltd. reported in [2007 (8) S.T.R. 231 (Tri. - Mum.)] has held that the assessee, a manufacturing unit paying Service tax on goods transport services, fall within the definition of provider of taxable service under Rule 2(r) of Cenvat Credit Rules, 2004 which includes a person liable for paying Service tax. As such, it was held that payment of Service tax in respect of services rendered by Goods Transport Agency through Cenvat Credit was appropriate. Similarly, in the case of CCE, Chandigarh v. Nahar Industries Enterprises Ltd. reported in [2007 (7) S.T.R. 26 (Tri. - Del.)] it was held that Cenvat credit can be utilised towards payment of Service Tax in respect of services received from Goods Transport Agency inasmuch as by a deemed fiction of law service recipient is held to be output service provider. The said order of the Honble Tribunal stands confirmed by the Honble Punjab and Haryana High Court as reported in 2011 (104) RLTONLINE 3 (P and H) when the appeal filed by the revenue was rejected. We also take note of latest decision of the Tribunal in the case of M/s. Dhillon Kool Drinks and Beverages Ltd. v. CCE, Jalandhar as reported in 2011-TIOL-307-CESTAT-DEL as also another decision of the Tribunal in the case of M/s. National Engineering Indus. Ltd. v. CCE, Jaipur-I issued vide Final Order No. S.T./64/11, dated 22-2-2011 laying down that the appellants are eligible to pay tax on GTA services received from their Cenvat Credit account.
4. As against the above decisions, learned SDR appearing for the Revenue has drawn our attention to the decision of the Tribunal in the case of ITC Ltd. v. CCE, Guntur reported in 2011 (23) S.T.R. 41 (Tri. - Bang.) holding that the appellant was not entitled to utilise the Cenvat Credit, for payment of service tax on the GTA services, so received by the appellant.
5. However, we find that facts in the above case of ITC Ltd. are entirely different inasmuch as it is seen that M/s. ITC was neither manufacturing any dutiable product nor providing any output services to any customer or client. As such, it was observed that though the services received by them is deemed to be an output services but as the Cenvat Credit on inputs or input services was not available to them as no manufacturing activity was being undertaken or any output services was being provided, the question of paying of Service Tax through Cenvat Credit account does not arise. In other words, the Bench observed that M/s. ITC was not entitled to avail any Cenvat Credit and as such there can be no account of any credit for utilisation towards payment of duty on the GTA services so received by them.
6. As discussed above, for the period prior to issue of Notification 10/2008-C.E. (N.T.), dated 1-3-2008 the issue stands finally decided in favour of the appellant by various judgments referred supra and ITC decision not being relevant to the facts of the case, we by following the earlier precedent decisions on the issue involved, set aside the impugned orders and allow both the appeals with consequential relief to the appellants."
9. Similar view was taken by the Division Bench of the Tribunal in the case of M/s.National Engineering Inds. Ltd. Vs CCE Jaipur 2011 (2) TMI 930 CESTAT, Delhi. On the identical issue, the Single Member of the Tribunal in the case of CCE and S.T Hyderabad Vs Aster Teleservices (P) Ltd. - 2013 (29) STR 475 (Tri.-Bang.) rejected the appeal filed by Revenue. The Division Bench of the Tribunal in the case of CCE Indore Vs Spendex Industries Ltd. 2013 (31) STR 472 (Tri.-Del.) on the identical issue for the period April 2006 to September 2006 held as under :-
"6. After hearing both the sides, we find that the Tribunal in the case of Shree Rajasthan Syntex Ltd. referred supra has taken note of identical submissions made on behalf of the assessee has held that recipient of services from the GTA is liable to pay the Service Tax and as such provider of taxable service in terms of Rule 2(r) and consequently gets covered by output service definition as appearing in Rule 2(p) of the Rules. As such, we find that deletion of explanation with effect from 18-4-2006 from Rule 2(p) of the Cenvat Credit Rules, 2004 would not make much difference. We also note that Uni Deritend Ltd. is a Single Member Bench decision without taking note of the earlier Division Bench judgment. In view of the above, we find no merits in the Revenues appeals and reject the same."
10. In view of the above discussion, respectfully following the decisions of the Division Bench in the case of Shree Rajasthan Syntex Ltd. (supra), I set aside the impugned order in so far as the demand of tax along with interest for the period 19.4.2006 to January 2007. The appeal filed by the assessee is allowed with consequential relief. The appeal filed by Revenue is rejected.