TaxTMI 
TaxTMI 
2019 (1) TMI 444
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.... Chennai. The assessee had taken credit on input services such as telephone, courier services, supply of labour etc. The head office of the assessee imported Head End and Distribution Equipments such as cable, nodes, amplifiers, splitters, set top boxes etc. on payment of appropriate CVD and SAD. The credit of CVD was transferred by the head office, registered as ISD, to the respondents through Material Receipt Order (M.R.O). Based on the M.R.O, the respondents availed cenvat credit of CVD amounting to Rs. 8,52,777/- during the year 2004-05 and Rs. 12,09,508/- during April 2007. Respondents had supplied the equipment to their customers / subscribers (either on sale or on rental basis) who opted to view the pay channels and raised invoices o....
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....ssessee is liable to pay service tax along with interest on the rental charges collected from the subscribers. Penalty imposed under Section 78 of the Finance Act, 1994 was set aside. Aggrieved, the department has filed the appeal before his forum. 2. Today, when the matter came up for hearing, on behalf of the appellant-Revenue, Ld. A.R Shri B. Balamurugan reiterated the grounds of appeal. He also submitted that when suppression of fact is proved then penalty under Section 78 is mandatory. 3. Per contra, on behalf of the respondent-assessee, Ld. Consultant Shri D.Santhana Gopalan made oral and written submissions which can be broadly summarized as under : i) The Respondent has rightly availed Cenvat credit on the capital goods tra....
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.... on the following decisions : a. Nirlon Ltd v. CCE [2015 (320) ELT 22 (SC)] b. CCE v. Tenneco RC India (P) Ltd [2015 (323) ELT 299 (Mad)] c. CCE v. Gujarat Glass (P) Ltd [2013 (290) ELT 538 (Guj)] vi) No penalty is imposable as the Respondent had availed credit under the bonafide belief regarding its eligibility. Further, the issue is one of interpretation of legal provisions and is also revenue neutral. Therefore, no penalty is imposable. vii) The Respondent was under the bonafide belief that the impugned transaction of renting set-top boxes amounted to deemed sale and therefore, not subject to service tax. Further, the issue is one of interpretation and therefore, extended period is not invokable in this case. 4. Heard b....
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.... thereon. It is also not the case that the Head office have only transferred the credit to the assessee by way of M.R.O, without actually effecting the transfer of the said capital goods to the assessee end. In a very strict and narrow interpretation of the legal provisions as existed during the period of dispute, the Input Service Distributor (I.S.D) would have distributed the cenvat credit only in respect of service tax paid on the input service. It is also true that the provision enabling taking of credit of inputs and capital goods received from the I.S.D was given effect by introduction of Rule 7(a) in the said Rule by Notification No.10/2008-CE (NT) w.e.f 1.4.2008. All the same, in our view, credits on capital goods which are undisput....