2008 (8) TMI 279 - AT - Service Tax

Tribunal Upholds Commissioner's Decision on Cenvat Credit for Mobile Phones

The Tribunal upheld the Commissioner (Appeals) order and rejected Revenue's appeals regarding the availment of Cenvat Credit on Service Tax paid on Mobile ... Cenvat credit of service tax on mobile phones - use in relation to business activities - Cenvat Credit Rules, 2004 - inapplicability of Board Circular No. 59/8/2003-S.T. dated 20-6-2003 under Cenvat Credit Rules, 2004 - precedent of Indian Rayon and Industries Ltd. on mobile phone creditCenvat credit of service tax on mobile phones - use in relation to business activities - inapplicability of Board Circular No. 59/8/2003-S.T. dated 20-6-2003 under Cenvat Credit Rules, 2004 - precedent of Indian Rayon and Industries Ltd. on mobile phone credit - Whether Cenvat credit of service tax paid on mobile phones used at the assessee's workplace and corporate offices for the period September, 2006 to April, 2007 was admissible - HELD THAT: - The Tribunal found from the show cause notice that the mobile phones were used at the respondent's work place (Renukoot) and corporate offices (Mumbai and Kolkata), and therefore the contention that no evidence of business use was produced was without substance. The Tribunal followed the earlier decision in Indian Rayon and Industries Ltd., which allowed Cenvat credit for mobile phones provided to employees for carrying out business transactions and held that Board Circular No.59/8/2003-S.T. could not be pressed against the Cenvat Credit Rules, 2004. Applying that reasoning, and having regard to the fact of use at business premises, the Tribunal upheld the Commissioner (Appeals) and found no reason to deny the credit of service tax on mobile phones. [Paras 4]The claim to Cenvat credit of service tax on mobile phones for the period September, 2006 to April, 2007 was held admissible and the appeals filed by the Revenue were rejected.Final Conclusion: The Tribunal upheld the Commissioner (Appeals), allowing Cenvat credit of service tax on mobile phones used at the assessee's workplace and corporate offices for the period September, 2006 to April, 2007; revenue appeals dismissed. Issues:- Availment of Cenvat Credit on Service Tax paid on Mobile Phones for business activities.Analysis:The judgment pertains to multiple appeals arising from a common order regarding the availment of Cenvat Credit on Service Tax paid on Mobile Phones by the Respondents for their business activities. The Respondents utilized the credit to pay central excise duty for their finished goods during a specific period. The issue raised was the eligibility of the Respondents to avail such credit, considering the applicability of a CBEC Circular. The Tribunal analyzed the submissions from both sides, where the Departmental Representative (DR) argued that the Respondents did not provide evidence of exclusive use of Mobile Phones for specified business activities as per the Cenvat Credit Rules.Upon examining the facts, the Tribunal found that the Mobile Phones were indeed used at the Respondent's work premises and Corporate offices in Mumbai and Kolkata. In support of their decision, the Tribunal referred to a previous case where Cenvat credit on Service Tax paid on Mobile Phones was allowed for business transactions conducted by employees. The Tribunal emphasized that the CBEC Circular cited by the DR could not be strictly applied under the Cenvat Credit Rules. Since the Mobile Phones were utilized in the Respondent's business operations at various locations, the Tribunal concluded that there was no justification to deny the Cenvat Credit on Service Tax paid on Mobile Phones.Based on the above analysis, the Tribunal upheld the order of the Commissioner (Appeals) and rejected the appeals filed by the Revenue. The judgment was pronounced on 19-8-2008, consolidating all appeals related to the common issue of Cenvat Credit on Service Tax paid on Mobile Phones for business purposes.