Appeal allowed on service tax for inspection charges & mobile phone services. Pre-deposit requirement waived.

The appeal challenged the disallowance of service tax on inspection charges for constructing staff quarters and mobile phone services. The Member allowed the appeal, granting relief to the appellants in both aspects of the disallowed service tax payments. The Member noted distinctions in definitions and cited precedents supporting the appellants' eligibility for service tax credit. The requirement of pre-deposit was waived, and the stay petition was allowed to proceed for a final decision on the appeal.

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Issues:
1. Disallowance of service tax on inspection charges for constructing staff quarters.
2. Disallowance of service tax on mobile phone service.

Analysis:
1. The appeal involved a challenge against the disallowance of service tax paid on inspection charges for constructing staff quarters. The Member (Technical) noted that the issue was narrow and had precedents from earlier Tribunal decisions and instructions from the Central Board of Excise and Customs (CBE&C). The requirement of pre-deposit was waived, and the stay petition was allowed to proceed to decide the appeal finally.

2. Regarding the service tax paid for inspection of staff quarters, the Commissioner relied on a decision of the High Court of Uttarakhand, which was related to Cenvat Credit of excise duty paid on construction materials. However, the Member observed that the definitions of input, capital goods, and input services were distinct and not comparable. The appellant cited Tribunal decisions like GHCL Ltd. Vs. CCE Bhavnagar and CCE Visakhapatnam Vs. Hindustan Zinc Ltd., where it was held that credit cannot be denied based on the residential nature of the construction. Consequently, the Member held that the appellants were eligible for the service tax credit in this regard.

3. Concerning the disallowance of service tax on mobile phone services, the appellant argued that the mobile phones were essential due to the location of the port and the need for communication among staff and officers. The appellant relied on a Tribunal decision in the case of CCE Nagpur Vs. Ultratech Cement Ltd., where it was held that the credit of service tax on mobile phone services was admissible. Additionally, the CBE&C had clarified in a circular that the credit of service tax paid on mobile phone services would be admissible. Consequently, the Member held that the appellants were eligible for the credit of service tax paid on mobile phone services.

4. In conclusion, based on the discussions and precedents cited, the appeal was allowed, granting relief to the appellants in both aspects of the disallowed service tax payments.

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