Cenvat credit on mobile phone services depends on actual use for output services or manufacture; factual verification was required.

Cenvat credit of service tax on mobile phone services was treated as admissible only if the phones were actually used for providing output services or in relation to manufacture of finished goods. Because no factual finding had been recorded on this essential issue, the denial of credit could not be sustained on the existing record. The matter was remanded to the original adjudicating authority to verify the actual use of the mobile phones and pass a fresh order in accordance with natural justice.

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Issues: Whether Cenvat credit of service tax paid on mobile phone services was admissible where the factual finding on use of the phones for output service or in or in relation to manufacture had not been recorded.

Analysis: Credit on mobile telephone services was treated as admissible under the applicable Board circular if the phones were used for providing output service or in or in relation to manufacture of finished goods. However, the record lacked a finding on this factual aspect, and the matter required examination of the actual use of the mobile phones by the appellant before grant or denial of credit.

Conclusion: The denial of credit was not finally sustained. The matter was remanded to the original adjudicating authority to verify the use of the mobile phones and pass a fresh order in accordance with natural justice.

Final Conclusion: The appellant obtained a limited procedural relief, with the dispute on Cenvat credit left open for fresh adjudication on the relevant factual issue.

Ratio Decidendi: Where admissibility of Cenvat credit depends on actual use of the service, and the adjudicating authority has not recorded a finding on that essential fact, the matter must be remanded for fresh determination.

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