Appeal granted for cenvat credit on telephone services used for business purposes

The Tribunal allowed the appeal, finding that the cenvat credit for service tax on telephone services utilized outside specific locations was admissible. The judgment emphasized the necessity of establishing a direct link between the services availed and their use for business purposes. The appellant successfully argued that there was no evidence or allegation that the telephone services were not utilized for business activities, leading to the decision in their favor and providing consequential relief.

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Issues:
Denial of cenvat credit for service tax towards telephone services utilized outside the plant and outside Ankleshwar.

Analysis:
The judgment pertains to the denial of cenvat credit for service tax towards telephone services utilized outside the plant and outside Ankleshwar. The audit report during EA 2000 highlighted that the assessee had taken credit for service tax on telephone services not directly or indirectly related to the manufacture of the final product. Proceedings were initiated to deny and demand cenvat credit amounting to Rs. 7,95,012/- with interest for the period August 2007 to June 2009. The demand was confirmed with interest and an equal amount of penalty imposed.

In the show cause notice, it was mentioned that the appellant was required to provide details of telephone services utilized outside the factory and Ankleshwar. The basis for denying the cenvat credit was that services were used outside these locations. The argument presented by the appellant was that there was no evidence to prove the services were related to business activities. However, the show cause notice did not allege that the services were not used for business purposes. Citing the case of Excel Crop Care Limited, the judgment highlighted that credit cannot be disallowed solely because phones were not installed within the factory premises. The decision in the case of BASP Industries further emphasized that the burden lies on the department to prove that the services were not used for business purposes.

Consequently, the Tribunal found that the credit availed was correct, as there was no evidence or allegation that the telephone services were not used for business purposes. The appeal was allowed, providing consequential relief to the appellant. The judgment underscores the importance of establishing a direct link between the services availed and their utilization for business purposes to determine the admissibility of cenvat credit for service tax on telephone services utilized outside specific locations.

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