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M/s. Bharti Airtel Ltd. Versus Commissioner of Service Tax, Delhi

2016 (5) TMI 376 - CESTAT NEW DELHI

Waiver of pre-deposit - Transfer of Cenvat Credit under Rule 10 in case of provider of output services - transfer of all assets on demerger - Cellular telecommunication services - Cenvat Credit availed on various inputs and capital goods used for setting up of towers and prefabricated buildings - Imposition of penalty - Held that:- The question as to when the transferor does not seek the transfer of the accumulated credit, whether the same would lie in the account books of transferor or in that .....

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advocate that the denial of credit to the appellant is not in accordance with the provisions of Rule 10.

As such, on the point of time bar also, the appellant has good prima facie case. Therefore the condition of pre-deposit is dispensed with and all. - Stay petition allowed - Service Tax Stay Application No. 52965 of 2014 & Service Tax Appeal No. 52490 of 2014 - Stay Order No . 50459 /2016 - Dated:- 11-4-2016 - MS ARCHANA WADHWA, MEMBER (JUDICIAL) AND MR. B RAVICHANDRAN, MEMBER (TECH .....

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es and during the period relevant for the purpose of present appeal, they were discharging their Service tax liability on telecommunication services, business support services, sponsored services and goods transport services, after obtaining centralized registration with the Service tax department. It is seen that as a result of Honble Delhi High Court order passed on September, 19, 2007, demerger took place on 31.1.08 and all the assets i.e. specific infrastructure were transferred by the appe .....

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e on 20.4.2010 seeking to recover the Cenvat credit availed by them on capital goods and inputs used in the erection of towers and fabricated building and utilized by them for payment of Service tax on the output services during the period 10.9.04 till 31.1.08. Revenue also sought to recover the credit lying unutilized with them as on 31.1.08, in terms of provisions of Rule 3(5) read with Rule 10(2) of Cenvat Credit Rules. 4. During the adjudication, the Commissioner held that Rule 3(5) of Credi .....

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transfer of infrastructure to M/s. BIL, the said credit has lapsed and is liable to be recovered. He also did not find favour in the appellants contention that demand stand raised by way of show cause notice on 20.4.2010 in respect of period ending on 31.1.08 and is hopelessly barred by limitation. However, while confirming the demand he did not impose any penalty on the appellant on the ground that there was confusion in the department itself over the above issue. 5. The present stay petition .....

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gned order, we find that the show cause notice having proposed the confirmation in terms of Rule 3(5) but the said Rule stand dropped by the adjudicating authority on the ground of inapplicability of the same, and the demand stand confirmed in terms of provisions of Rule 10 of Cenvat Credit Rules which reads as follows:- Rule 10. Transfer of CENVAT credit. - (1) If a manufacturer of the final products shifts his factory to another site or the factory is transferred on account of change in owners .....

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transfer of the business to a joint venture with the specific provision for transfer of liabilities of such business, then, the provider of output service shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated business. (3) The transfer of the CENVAT credit under sub-rules (1) and (2) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred along with the factory .....

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to a joint venture. Admittedly, in the present case, ownership of the towers and fabricated building stand transferred to M/s. BIL. In terms of said Rule 10, the appellant was within its right to seek benefit on this count. Use of the words the manufacturer shall be allowed to transfer of cenvat credit in the said Rule is supportive of the fact that said rule is beneficial piece of legislation extending the facility to the transferor to seek transfer of accumulated credit in the circumstances .....

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the manufacturer himself would not be in a position to use the same. In the absence of any positive point of the said Rule to said effect, the credit would continue to be in the books of original owner and the appellant cannot be made to reverse the same. 8. At this stage, we also take note of the Tribunals decision in the case of Bilag Industries P Ltd. vs. CCE, Daman [2010 (259) ELT 461 (Tri-Ahmd)] wherein the factual situation was considered and it was observed that inputs and capital goods .....

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th the learned advocate that the denial of credit to the appellant is not in accordance with the provisions of Rule 10. However, at this stage, we make it clear that initial availment of credit in respect of inputs and capital goods used for erection of towers and prefabricated building is otherwise in dispute in a separate set of proceedings. Same would be decided independently in those proceedings. Inasmuch as, in the present proceedings, we are only concerned with the applicability of provisi .....

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