Service Tax on Mobile Phones: Eligible for Cenvat Credit

The Tribunal allowed the appeal, holding that service tax paid on mobile phones is eligible for Cenvat credit for service providers and manufacturers. It emphasized verifying the use of mobile phones in relation to the manufacture of final products as per the definition of 'input service' under the Cenvat Credit Rules, 2004. The Tribunal found that activities like accounting, auditing, financing, and others fall under this definition, and the use of mobile phones in business activities should be considered eligible. The decision set aside the impugned order and granted consequential relief to the appellants.

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Issues: Denial of credit on service tax paid on mobile phones from February 2005 to September 2005.

In this case, the appellants appealed against the denial of credit on service tax paid on mobile phones during a specific period. The learned Advocate argued citing precedents like Indian Rayon & Industries Ltd., CCE Jaipur-II v. M/s. Agarwal Trading Co., and Maini Precision Products Pvt. Ltd. The learned DR, however, supported the Commissioner (Appeals) findings and referred to the case of Rajasthan Textile Mills v. CCE Jaipur, which had remanded a similar matter for further verification. The Tribunal, after considering both sides and examining the records, found that service tax paid on mobile phones is indeed eligible for Cenvat credit for service providers and manufacturers. The learned DR emphasized the necessity of verifying the use of mobile phones in relation to the manufacture of final products, as per the definition of 'input service' under Rule 2 of the Cenvat Credit Rules, 2004. It was argued that activities like accounting, auditing, financing, and others fall under the definition of input service, and the use of mobile phones in business activities should be considered eligible. The Tribunal noted that the show cause notice did not allege any misuse of mobile phones in business activities and highlighted that the argument presented by the DR was not sustainable. Relying on the decision of Indian Rayon & Industries Ltd., the Tribunal set aside the impugned order and allowed the appeal with consequential relief.

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