Cenvat credit on mobile phones is admissible unless their use is shown to be unrelated to business.

Cenvat credit of service tax on mobile phone services cannot be denied merely because the phones were not installed in the assessee's premises. The decisive consideration is whether the telephone use was connected with business; where there is no finding that the calls were unrelated to business, the non-installation of the phones is not a valid basis to refuse credit. The settled position stated in the text is that credit remains admissible unless the department shows that the cell phone use was unconnected with the assessee's business.

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Issues: Whether Cenvat credit of service tax on mobile phones could be denied merely because the phones were not installed in the assessee's premises, when there was no finding that their use was unrelated to business.

Analysis: The denial of credit was based only on the non-installation of mobile phones in the assessee's premises. That ground was held to be irrelevant where the material did not show that the calls made from the phones were unconnected with business. The settled legal position is that credit is admissible unless the use of the cell phone is shown to be unrelated to the business of the assessee.

Conclusion: Credit could not be denied on the sole ground of non-installation of the mobile phones in the premises. The issue was decided in favour of the assessee.

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