CENVAT credit for service tax payment requires examination of the statutory scheme, not reliance on a circular alone.

Adjudication confirming service tax payment from the CENVAT credit account was set aside because it relied only on a Board circular and did not examine the governing CENVAT Credit Rules, the Service Tax Rules, or the effect of the later amendment under Notification No. 10/2008-C.E. (N.T.). The authority also failed to consider the appellant's contention that, as a manufacturer and recipient liable for GTA service tax, it could use CENVAT credit for payment. The matter was remanded for fresh decision after hearing the appellant and considering the statutory scheme and submissions.

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Issues: Whether the order confirming service tax payment from the CENVAT credit account, based only on the Board circular, was liable to be set aside and the matter remanded for fresh decision in light of the CENVAT Credit Rules and the Service Tax Rules.

Analysis: The order under challenge had proceeded only on the basis of the Board's Circular No. 97/8/2007-S.T. dated 23-8-2007 and treated it as binding without examining the appellant's contention that, as a manufacturer and recipient liable to pay service tax on GTA service, it could utilize CENVAT credit for such payment. The relevant rules and the effect of the later amendment notified in Notification No. 10/2008-C.E. (N.T.) were not independently considered. Since the adjudication was not made after examining the statutory scheme and the appellant's submissions, the matter required reconsideration.

Conclusion: The impugned order was set aside and the matter was remanded to the Commissioner (Appeals) for fresh decision after granting an opportunity of hearing to the appellant.

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