Appellant allowed to use Cenvat account for service tax on services from abroad.

The Tribunal held that the appellant could utilize the Cenvat account for payment of service tax on services received from abroad, considering them a provider of taxable service under the Cenvat Credit Rules and Service Tax Rules. The Commissioner's decision was overturned, and the appeal by M/s. Kansara Modler Ltd. against the order-in-appeal was allowed in their favor.

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Issues:
Interpretation of Cenvat Credit Rules regarding the utilization of Cenvat account for payment of service tax on services received from abroad.

Analysis:
The appeal was filed by M/s. Kansara Modler Ltd. against an order-in-appeal regarding the payment of service tax on services received from M/s. Aschaffenburger Maschinenfabrik Johhann Modeler GMBH, Germany. The Department contended that service tax should be paid in cash and not through Cenvat Credit. The original authority adjudicated the matter, and the appeal was rejected by the Commissioner of Central Excise (Appeals), leading the appellant to approach the Tribunal.

The main contention revolved around whether the appellant could be considered a provider of output service under the Cenvat Credit Rules. The Revenue argued that the appellant, as a recipient of services, could not utilize the Cenvat account for service tax payment. However, the appellant claimed that they qualified as a provider of output service based on the definitions under the Cenvat Credit Rules and Service Tax Rules.

The Tribunal analyzed the relevant rules, specifically Rule 2(p), Rule 2(q), Rule 2(r) of the Cenvat Credit Rules, and Rule 2(1)(d)(iv) of the Service Tax Rules, to determine the appellant's status. By interpreting Rule 2(q) of the Cenvat Credit Rules in conjunction with Rule 2(1)(d)(iv), the Tribunal concluded that the appellant could be considered a person liable for service tax, thereby qualifying as a provider of taxable service and an output service provider under the rules.

Additionally, the Tribunal addressed the Revenue's reliance on Rule 5 of the Taxation of Services (Provided from Outside India and Received in India) Rules, clarifying that Rule 5 pertained to availing Cenvat credit, not its utilization. Consequently, the Tribunal disagreed with the Commissioner's decision not to recognize the appellant as an output service provider, leading to the setting aside of the impugned order and allowing the appeal in favor of the appellant.

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