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 insofar 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. v. CCE [2013] 38 STT 198 (New Delhi – CESTAT)

(2) Topland Exports v. CCE [2013] 39 STT 699

3.1 Ld. 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 v. Nahar Industrial Enterprises Ltd. [2012] 35 STT 391

(ii) CST v. Hero Honda Motors Ltd. [2012] 38 STT 72

(iii) CST v. Aravind Fashions Ltd. [2012] 34 STT 314

(iv) CCE v. Auro Spg. Mills [CEA No. 9 of 2008, dated 29-7-2011]

(v) CCE v. Deepak Spinners Ltd. [2012] 38 STT 101

(vi) CCE v. Cheran Spinners Ltd. [2014] 43 GST 274

In view of the above, learned advocate submits that the impugned order insofar 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'