1. After examining the records and hearing both sides, I am of the view that the appeal itself requires to be finally disposed of at this stage. Accordingly, after dispensing with predeposit, I proceed to deal with the appeal.
2. The appellants are manufacturers of Polyester Yarn. They are liable to pay service tax in respect of Goods Transport Agency's Service (GTA Service, for short) availed by them from 1st January, 2005, as per Rule 2(1)(d)(v) of the Service Tax Rules, 1994 read with Section 68(2) of the Finance Act, 1994. During the period October, 2005 to March, 2006, they had paid service tax to the extent of Rs. 50,768/- (including Education Cess) by way of debit in their CENVAT account. For the payment of the above tax, what they utilised was credit of duty paid on inputs and capital goods as also credit of service tax paid on input services. The department objected to such utilization of credit. Both the lower authorities sustained this objection and demanded Rs. 50,678/- from the party under Section 73 of the Finance Act, 1994.
However, the penalty imposed on the party by the original authority was vacated by the appellate authority. The present appeal is directed against denial of the CENVAT credit.
3. After considering the submissions of both sides, I find that the short question arising for consideration in this case requires to be settled with reference to Explanation to the definition of "Output Service" under Rule 2(p) of the CENVAT Credit Rules, 2004. It is submitted by learned Counsel that identical question was considered by this Bench in the case of R.R.D. Tex Pvt. Ltd. v. Commissioner of Central Excise, Salem vide Final Order No. 606/07 dated 18.05.2007 and that it was held that, where a person liable for paying service tax does not provide any taxable service, the service for which he was liable to pay service tax should be deemed to be 'Output Service'.
Accordingly, in that case, it was held that GTA Service on which the assessee paid the service tax should be deemed to be their 'Output Service' and, for payment of such tax, credit of service tax paid on any input service and/or credit of duty paid on any input or capital goods could be validly availed. In the result, in the cited case, the CENVAT credit in question was allowed to the assessee. A similar view was taken by this Bench in the case of MMS Steels Ltd. and Ors. v.Commissioner of Central Excise, Tricky, Madurai, Salem 2007-TIOL-1317-CESTAT-MAD also. As rightly pointed out by learned Counsel, the period of dispute in the present case being prior to 19.04.2006 (the date on which the aforesaid Explanation was omitted), the ratio of the cited decisions would be applicable. I have considered the submissions of learned SDR also. Learned SDR has not claimed that the department has obtained stay of operation of any of the decisions cited by learned Counsel.
4. Following the cited decisions, the impugned order is set aside and this appeal is allowed.