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Idea Cellular Ltd. Versus Commissioner of Service Tax, Mumbai

2016 (9) TMI 1136 - CESTAT MUMBAI

Cenvat credit - service tax paid on various input services and utilization thereof - Demand - utilization of CENVAT credit in excess of 20% - Held that:- as per the provisions of Rule 6(3)) of Cenvat Credit Rules, 2004, cenvat credit cannot be utilized in excess of 20% of the credit, if an assessee is providing taxable and non-taxable services. Appellant was correct in submitting that similar issue in respect of appellant is decided by this Bench as reported at [2009 (2) TMI 91 - CESTAT NEW DELH .....

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to deviate from such a reasoned order. Accordingly, we hold that CENVAT credit availed of service tax paid on services utilized for erection of tower. - Demand - availment of CENVAT credit on capital goods at one go -Held that:- it is the case of revenue that appellant cannot do so and as per rules they have availed 50% of the duty paid in first year in which CENVAT credit are received and balance 50% next year. Appellant has availed 100% credit in the second year. We find that there is no d .....

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Tribunal in favour of assessee. By respectfully following the ratio we hold that the appeal of the appellant on this point succeeds. - Demand - supply of Diesel - diesel is excluded input for availing CENVAT credit - Held that:- it is claimed by the learned Chartered Accountant that they had availed credit of service tax paid on the various services which are associated with the supply and running of DG set and not availed the credit of duty paid on Diesel. This stand was taken by the appell .....

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cannot be denied to appellant on this point. The appeal is allowed. - Demand - liasioning charges, catering services etc. - Held that:- the stand of revenue on these two points seems to be not in consonance with the law as it is undisputed that appellant has engaged professional service for liasioning with various authorities for and in respect of the business activity and paid service tax to the Government. This issue is now settled by Hon'ble High Court of in the case of Hindustan Coca Col .....

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mbay in the case of Bharati Airtel [2014 (9) TMI 38 - BOMBAY HIGH COURT]. Accordingly, we hold that appellant's appeal on this point fails and they are directed to pay back the amount with interest. - Imposition of penalty - Held that:- since all the issues involved in this case are of interpretative nature, there is no reason to visit appellant with any penalty. - Appeal disposed of - Appeal No. ST/384/10 - Dated:- 28-7-2016 - Mr. M.V. Ravindran, Member (Judicial) And Hon ble Mr. C.J. Mathe .....

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rds of the appellant. Audit party was of the view that appellant having provided exempted as well as taxable services has wrongly utilized the entire service tax credit, in excess of 20% ceiling as per the provisions of Cenvat Credit Rules, 2004; availed CENVAT credit on various services which cannot be considered input services. The period involved in this case is March 2004 to December 2007. A show-cause notice was issued demanding the tax; and dispute relates to following issues:- Sr. No. Iss .....

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t credit on catering charges Cenvat Credit on towers and shelters 2006-07 to December 2007 443,443 7 2007 to December 2007 4,643,553 - 8 Total credit disallowed 26,698,493 3. The show-cause notice was contested by appellant on merits and also on limitation. The adjudicating authority after following due process of law confirmed the entire demand with interest and also imported equivalent penalty and a penalty under Section 77 of Finance Act, 1994. 4. Learned Chartered Accountant appearing for th .....

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ove mentioned, the appellant has utilized the CENVAT credit less than 20% of the service tax liability. The same is as tabulated below:- Sr. No. Month Amount Rs 1 2 3 1 September 04 2,965,739 2 November 04 1,736,781 3 December 04 2,394,166 4 January 05 1,195,147 5 February 06 995,768 6 March 05 2,960,421 7 April 05 886,331 8 May 05 4,767,122 9 July 05 2,437,570 10 August 05 1,581,916 11 October 05 1,683,961 12 November 05 3,854,674 13 January 06 2,685,183 14 March 06 3,325,786 15 April 06 5,546, .....

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e Tribunal in the case of M/s VijayaRoadlines as reported in [2007 (7) STR 219]. as well as in the appellants own case as reported in [2009 (16) STR 714]. Hence there is no contravention of the said provision by the appellant. (b) Cenvat credit on services utilized in construction of tower: (i) The appellant has received the services such as erection, commissioning, installation, etc. which are used in setting up of towers. The period of dispute in the present case is from 2003-04 to Dec-07. The .....

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he specific exclusion provided under the definition of input services. The credit of other services namely erection, commissioning and installation, consulting engineer services, business auxiliary service, business support services were allowed. In the present case, the period of dispute is prior to 1st April, 2011 i.e. 2003-04 to Dec-07. Thus credit of all the services used in setting up of the tower is eligible as there was no restriction clause provided in definition of input service during .....

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ighway Prop. Pvt. Ltd [2012 (28) STR 166 (Tri-Ahbd.)] (iii) Further the annexure-III to the show cause notice (refer page 73 of the appeal set) summarizes the nature as well as period of dispute. It will be evident that column 3 i.e. availment of credit on input service relating to the telecommunication towers and part thereof, an amount of ₹ 83,760/- pertains to the period 2003-04. It is submitted that during the said period the cenvat credit was availed under Service Tax Credit Rules, 20 .....

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has not been paid by the input service provider for any reason, whatsoever, such credit along with interest shall be recoverable from the person availing such service tax credit and the provisions of section 73, 75, 76 and 78 of the Act, shall apply mutatis mutandis for effecting such recoveries. In view of the above it is submitted that the show cause notice issued demanding the credit of the said amount under CCR, 2004 is incorrect. (c) Availment of cenvat credit on capital goods in excess of .....

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receipt of the goods and the 9th column indicates the year of cenvat credit availed. On comparison of both the columns, the credit was availed in the year subsequent to year in which the capital goods were received. The restriction of availment of credit of 50% applies only in the year of receipt of capital goods. In case the credit of 50% is not availed in the year of receipt of capital goods, then there is no restriction the Cenvat Credit Rules that the credit of entire duty paid on capital g .....

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bove submission, in any case the demand of credit for 50% of the duty paid on the capital goods cannot be demanded as said credit will be eligible in subsequent year. Therefore, demand of credit is not sustainable. (d) The credit on input services related to supply of diesel: (i) The appellants are engaged in providing telecommunication services. The towers are required to be erected at various places. The running of the tower with the equipments such as MSC, BSC, BTS, etc. requires uninterrupte .....

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ded in definition of inputs as defined under rule 2 (k) of the CCR, 2004 whereas the dispute in the present case is in relation to the services used in supply of diesel. The company has availed the credit of service tax paid on such services and not the credit of the duty paid on diesel. Accordingly, it is submitted that the restriction provided under the CCR,2004 is not applicable to the present case and the appellant has rightly availed the credit. (e) Cenvat credit on liasoning charges: The s .....

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to the service recipient even if it is held that no service tax is payable by the service provider. The appellant relies upon the following judgments: HINDUSTAN COCA COLA BEVERAGES PVT. LTD.2010 (19) S.T.R. 280 (Tri. - Del.) Further, the OIO in para 4.4 (refer page 43 of the appeal set) observes that the appellant has incurred expenses on business activity to promote their business and therefore has denied the credit. Firstly, the said finding is beyond the scope of the show cause notice. Second .....

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g out of Appeal No. ST/87803/14 filed by Idea Cellular Ltd. Further, it is consistently held that the credit of catering service is available. The appellant also relies upon the judgement in case of M/s Ultra Tech Cement as reported in 2010 (260) E.L.T. 369 (Bom.). Therefore, the credit of the same is rightly availed by the appellant. (g) Cenvat credit on tower & shelter: (i) The appellant has correctly availed the credit of the of the above items as they are inputs as well as capital goods .....

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be evident that the matter was finally decided by the Larger Bench. The reference of the Larger Bench itself substantiates that there was divergent view regarding eligibility of credit on towers and shelters. Accordingly, it is submitted that there was reasonable cause for availing the said credit. Accordingly, it is submitted that penalty shall not be imposed as per section 80 of the Finance Act, 1994. The appellant rely on the following judgement: * GUJARAT STATE PETRONET LTD. 2013 (32) S.T.R. .....

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CTORIES LTD. 2010 (257) E.L.T. 224 (All.) (h) Time Barring: The appellant was issued the show cause notice vide show cause notice dt. 11.06.2008 for the period 2003-04 to Dec-07. Thus the extended period has been invoked. It will be evident from the submission that the appellant had rightly availed the credit and accordingly it is submitted that the demand cannot be issued for the extended period and accordingly the demand for the period 2003-04 to 2006-07amounting to ₹ 1,99,89,538/-is tim .....

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the appellants had bona-fide belief that the credit is rightly availed by them and in any case if the credit is denied to the appellant, the penalty imposed shall be set aside under section 80 of the Finance Act, 1994. 5. Learned Additional Commissioner (A.R.) on the other hand would take us through the impugned order and submit that the order is self explanatory and CENVAT credit has been correctly denied to appellant. He would reiterate the findings of adjudicating authority. 6. We have consi .....

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has wrongly utilized excess CENVAT credit of more than 20% of credit balance in few months despite rendering taxable non-taxable services. In our considered view the adjudicating authority has erred in coming to such a conclusion we address each issue as under:- (a) Demand pertaining to utilization of CENVAT credit in excess of 20% As per the provisions of Rule 6(3)) of Cenvat Credit Rules, 2004, cenvat credit cannot be utilized in excess of 20% of the credit, if an assessee is providing taxabl .....

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before the Bench. Tribunal considering the issue from all angles held that CENVAT credit can be availed of service tax paid on services utilized for erection of towers. We do not find any reason to deviate from such a reasoned order. Accordingly, we hold that CENVAT credit availed of service tax paid on services utilized for erection of tower. (c) Demand in respect of availment of CENVAT credit on capital goods. In this issue appellant availed CENVAT credit of excise duty paid on capital goods a .....

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Rules, 2004, do no restrict availment of credit of 100% of duty paid on capital goods in the second year. The issue is now squarely covered in favour of appellant in the case of Herbicure Pvt. Ltd. 2007 (216) ELT 216 (Tri. Kolkata) wherein similar issue is decided by Tribunal in favour of assessee. Respectfully following the ratio we hold that the appeal of appellant on this point succeeds. (d) Demand in respect of supply of Diesel Revenue authorities want to deny this credit on the ground that .....

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t seems that the same is accepted by the adjudicating authority as there are no findings recorded on this issue. On perusal of definition of inputs and input services in Rule 2(k) and (l) of Cenvat Credit Rules, 2004, we find that CENVAT credit cannot be availed of duty paid on Diesel, but there is no bar in availing CENVAT credit of service tax paid on services associated with delivery of diesel, loading in DG set etc. Accordingly, we hold that CENVAT credit cannot be denied to appellant on thi .....

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