CENVAT credit on mobile phone service required proof of use; failure to record findings led to remand for fresh decision.

CENVAT credit on mobile phone service could not be sustained without findings that the service was used for providing output service or in relation to manufacture, and without examining whether the assessee discharged the burden of proof. The lower appellate authority also failed to address the penalty issue in accordance with law and natural justice. The order was therefore set aside and the matter remanded for fresh decision after proper factual examination, including the relevance of the Board's circular on admissibility of credit from 10-09-2004.

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Issues: Whether the impugned order granting CENVAT credit on mobile phone service and deleting penalty required to be set aside and remanded for fresh decision.

Analysis: The lower appellate authority had allowed credit and deleted penalty without recording the requisite findings on whether the mobile phone service was used for providing output service or in relation to manufacture, and without examining whether the assessee had discharged the burden of proof. The Board's circular clarifying admissibility of credit from 10-09-2004 and the requirement of proving use of the service were relevant, and the matter also required reconsideration of the penalty issue in accordance with law and natural justice.

Conclusion: The impugned order was set aside and the matter was remanded to the lower appellate authority for fresh decision.

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