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2017 Supreme(All) 118
ALLAHABAD HIGH COURT
(Lucknow Bench)
BEFORE : SUDHIR AGARWAL AND RAVINDRA NATH MISHRA-II, JJ.
M/s. OUDH SUGAR MILLS LTD. ....Appellant
Versus
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL AND OTHERS ....Respondents
(Central Excise Appeal No. 11 of 2013, decided on 2nd February, 2017)
Counsel :
Sudeep Kumar for the Appellant; A.S.G., Dipak Seth and Sunil Sharma for the Respondents.
Headnote:Cenvat Credit Rules, 2004—Rules 2(p), (q), (r), 3 (4)—Central Excise Act, 1944—Rule 2(i) (d)—Finance Act, 1994—Section 66—Cenvat Credit—Recovery of—Legality—Assessee paid Services Tax by availing cenvat credit of duty paid on ‘Inputs’, ‘Capital Goods’ and ‘Service Tax on Input Services’—In relation to service provided or agreed to be provided by GTA in respect of transportation of goods by road—Where person liable to pay freight is any factory registered under or governed by Factories Act is such a category—Any person who pays or is liable to pay freight either himself or through his agent for transportation of such goods by road in a goods carriage is included within term ‘person liable for paying service tax’—Even after exclusion of normal term ‘liability’ under Rule 2(p) (q) and (r) of Rules 2004 read with Rule 2(i) (d) of Rules 1994 is applicable to such category of persons as are covered therein irrespective of explanation or deemed fiction therein—Assessee in instant case satisfies aforesaid conditions—Thus entitled for utilization of Cenvat Credit in terms of Rule 3 (4) of Cenvat Credit Rules, 2004. [Paras 3, 19 and 20]
Result; Appeal Allowed.
By the Court.—Heard Sri Sudeep Kumar, learned counsel for appellant and Sri Dipak Seth, counsel for respondents.
2. This appeal under Section 35G of Central Excise Act 1944 (hereinafter referred to as “Act 1944”) has arisen from judgment and order dated 1.3.2013 passed by Customs, Excise & Service Tax Appellate Tribunal, Principal Bench, New Delhi (hereinafter referred to as “Tribunal”) in ST/ROM/4755/2012 whereby application for review/modification of order dated 30.7.2012 passed in ST Appeal No. 649/2010-SM has been rejected. Assessee appellant’s appeal against recovery of Cenvat Credit of Rs. 4,04,179/- has been rejected vide order dated 30.7.2012.
3. This appeal was admitted on following substantial question of law :
“Whether the appellant can be said to be “Provider” of any “out put services” and is entitled for utilization of Cenvat Credit in terms of Rule 3 (4) of Cenvat Credit Rules, 2004 prior to amendment dated 1.3.2008.”
4. Brief facts necessary to understand the dispute are narrated as under;
5. M/s Oudh Sugar Mills Ltd. (appellant but referred to herein as “Assessee”) is a registered Company under Companies Act, 1956 having its registered office at P.O. Hargaon, District Sitapur and is running sugar/distillery Units thereat. It is engaged in manufacture of Cane Sugar/Vaccum Pan Sugar and Ethyl Alcohol falling under Sub Heading No. 1701 1190 and Sub Heading No. 2207 2000 respectively of First Schedule of Central Excise Tariff Act, 1985 (hereinafter referred to as “Act 1985”).
6. Sugar Molasses is a by-product in manufacture of Sugar and comes under Heading No. 1703 1000 of Act 1985. It attracts specific rate of duty. Excise duty on Sugar and Molasses is paid on their clearances from factory as per procedure set out under Central Excise Rules, 2002 (hereinafter referred to as “Rules 2002”). Assessee also used Molasses captively in its distillery unit for manufacturing Ethyl Alcohol and Denatured Ethyl Alcohol.
7. Finance Act, 1994 has imposed “Service tax”. Section 66 is a charging section providing levy of tax on ‘taxable services’ referred to in various sub clauses of Section 65. Clause 105 of Section 65 defines ‘taxable services’ and sub clause (zzp) states that ‘taxable services’ means any services provided or to be provided by a Goods Transport Agency (hereinafter referred to as “GTA”) in relation to transportation of goods by Road in a goods carrier.
8. Service Tax Rules were introduced vide Notification dated 28.6.1994 w.e.f. 1.7.1994 (hereinafter referred to as “Rules 1994”). GTA has been defined in Section 65(50b) and reads as under :
“any person who provides service in relation to transportation of goods by road and issues consignment note, by whatever name called.”
9. Service Tax on transport of goods by road was made effective from 1.1.2005 vide notification dated 3.12.2004 by amending Rules 1994. Section 68 provides for payment of service tax and reads as under :
“Section 68—Payment of service tax—(1) Every person providing taxable service to any person shall pay service tax at the rate specified in Section 66 in such manner and within such period as may be prescribed.
(2) Notwithstanding anything contained in sub-Section (1) in respect of any taxable service notified by the Central Government in the Official Gazatte, 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.”
10. Central Government enacted Cenvat Credit Rules, 2004 (hereinafter referred to as “Rules 2004”) vide Notification dated 10.9.2004. Assessee is availing credit of Central Excise paid on ‘Inputs’ and ‘Capital Goods’ and service tax paid on Input Services under Rules 2004 for further payment of duty. Assessee was availing services of GTA and paying service tax on the same as recipient of the said service.
