1. In the impugned order, learned Commissioner confirmed a demand of service tax against the appellants to the extent of over Rs. 1.38 crores under Rule 14 of the CENVAT Credit Rules, 2004. He also disallowed to the party service tax credit of about Rs. 60 lakhs being unutilised credit lying as on September 30, 2004. The entire demand is for the period May 14, 2003 to September 30, 2004. The relevant show cause notice was issued on October 21, 2005, i.e., beyond one year from the date of availment of the credit in question. The appellants have contested the demand both on merits and on limitation. Learned Senior Counsel has extensively referred to a few provisions of the CENVAT Credit Rules, 2004. One of these provisions is rule 2(r) which defines "provider of taxable service" as including a person liable for paying service tax. With reference to Section 65(7) of the Finance Act, 1994, learned Counsel submits that "a person liable for paying service tax" is an assessee and that the appellants have been recognised as an assessee for the purpose of levy of service tax. Learned Counsel has also referred to Rule 11 (transitional provision) of the above rules in his endeavour to show that credit on input services available to the appellants prior to September 10, 2004 (the date on which the above Rules came into force) could be utilised after that date. Finally, it is submitted that the services received by the appellants from the foreign party should be treated as "output service" in the light of the above provisions so that credit on input services could be utilised for payment of tax on such output services for the entire period. This case of the appellants has been successfully rebutted by learned SDR who has cited the definition of "output service" available under rule 2(a) of the Service Tax Credit Rules, 2002. This definition reads as under: 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.
2. In the present case, "consulting engineer's service" was received by the appellants from abroad on payment of a consideration. Learned Commissioner considered the appellants as the service recipient. The appellants want themselves to be treated as service provider. However, it appears, they have not been able to name any service recipient for the service in question. If the appellants' claim to be service provider has to be accepted, they must necessarily point out the service recipient. In this view of the matter, we cannot, prima facie, find fault with the decision of learned Commissioner on merits.
3. However, the appellants seem to have a good case on limitation. It is said that they used to file their ST 3 returns periodically during the entire period and, therefrom, the department is aware of the material facts. Admittedly, the show cause notice was issued beyond the normal period of limitation. The provision for invoking the extended period of limitation was inserted in the Finance Act, 2004 on September 10, 2004. Even from that date, the department took more than one year to issue the show cause notice and, that too, on the ground of suppression. Obviously, there was no suppression on the part of the appellants who admittedly filed their returns periodically.
4. The appellants seem to have a good case on the ground of limitation and accordingly we grant waiver of pre-deposit and stay of recovery in respect of the tax amount. Having regard to the high stake involved in the case as pointed out by learned SDR we are of the view that the appeal should be disposed of as early as possible. Accordingly, we direct the appeal to be posted to December 19, 2006 to be heard along with S/106/ 2006.