TaxTMI 
TaxTMI 
2023 (5) TMI 1153
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....pellant has been paying Service Tax regularly, but it appeared to the Revenue that the appellant was not paying Service Tax on the 'interconnection service' falling under the category of telecommunication service, which enables the telephone subscribers of various telegraph authorities to connect with each other. The Revenue also appears to have noticed that the appellant, who was providing the interconnection service, was also collecting interconnect usage charges (IUC), the tax on which was being remitted by the appellant only from 01.06.2007. The reason for not paying the Service Tax on the said IUC charges prior to 01.06.2007, apparently, is due to the fact that Service Tax on IUC charges was exempted. With this, the Revenue suspected that the appellant was providing both taxable and exempted services prior to 01.06.2007 and hence, by virtue of Rule 6(3)(c) of the CENVAT Credit Rules, 2004, the appellant could utilize credit only to the extent of an amount not exceeding 20% of the amount of Service Tax payable on taxable output service. 2.2 A Show Cause Notice No. 14/2010 dated 29.04.2010 thus came to be issued alleging that since the appellant was rendering both taxable and....
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....documents borne on record. 3.1.4 The appellant claimed to have been filing, as admitted by the Revenue, its returns regularly under the erstwhile 'telephone services' and later, 'telecommunication services' and that their accounts were regularly audited by the Revenue; with the amendment effective 20.10.2005 which required an assessee to provide details of credit taken, separately, on inputs, input services and capital goods, was very much within the knowledge of the Department; and hence, the allegation of suppression could not sustain. 3.2 They had also relied on an order of the Principal Bench of the CESTAT in M/s. Idea Cellular Ltd. v. Commissioner of Central Excise, Rohtak [2009 (16) S.T.R. 712 (Tribunal - Delhi)] wherein the Learned Bench had allowed the utilization of CENVAT Credit availed in respect of 17 input services specified in Rule 6 (5) of the CENVAT Credit Rules, 2004 and had also permitted the utilization of CENVAT Credit on capital goods under Rule 6 (4) ibid. without imposing any restriction of 20% of Service Tax payable on output services in terms of Rule 6(3)(c) of the CENVAT Credit Rules, 2004. 4.1 During the course of adjudication, the Commissioner o....
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....n similar allegations, proposing to demand similar CENVAT Credit, the lower authority had dropped the proceedings by observing that the utilization of credit in excess of 20% of the capital goods credit and on the services specified in Rule 6 (5) ibid. was in order; but however, the lower authority has deviated without any logic to confirm the demand proposed in Show Cause Notice No. 14/2010 after observing that the Show Cause Notice was issued for utilization of CENVAT Credit in excess of 20% on 'inputs and input services'. That is to say, it is the case of the appellant that had the Commissioner considered the exclusion of utilization of credit relating to capital goods as well in this Show Cause Notice, then, there would have been no demand. 7.3 She further contended that as long as capital goods were not used exclusively for providing exempted services, there was no other restriction in availing and utilizing the credit thereon; that is to say, the eligible CENVAT Credit could be fully utilized for payment of Service Tax liability and therefore, the restriction could not apply to the capital goods credit. 7.4 Ms. Krithika Jaganathan, Learned Advocate, has further invited ....
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....South Limited, Chennai and Show Cause Notice No. 14/2010 dated 29.04.2010 was issued to M/s. Vodafone Essar Cellular Limited, Coimbatore and it appears that the above Show Cause Notices were for the periods from September 2004 to March 2007 and April 2005 to May 2007 respectively. Further, he appears to have accepted the plea of the appellant in their reply to the Show Cause Notice No. 71/2008 that, in view of the clear provisions of Rule 6(5) ibid., they were entitled to avail and utilize the whole of the CENVAT Credit in respect of the specified services unless the same were used exclusively for providing exempted output service; that it is not the case of the Revenue that the appellant had used any of the specified services exclusively for providing exempted output service and that the restriction under Rule 6(3)(c) would not apply to services specified in Rule 6(5) ibid. 11.1.4 The Learned Commissioner also appears to have accepted the plea of the appellant in their reply to the above Show Cause Notice that even if the capital goods were partly used for providing exempted service, the credit of the whole of the excise duty paid on the capital goods was required to be allowed....
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....pplicable to capital goods and 17 input services specified under Rule 6(5). 12.1 We find that the above is precisely the ratio laid down by the Learned Principal Bench in the case of M/s. Idea Cellular Ltd. (supra) wherein the contentions of the appellant therein have been accepted by the Bench. The relevant observation of the Learned Principal Bench reads as under: - "4. Second plea of the Appellants is that even if the provisions of Rule 6(3)(c) are attracted, the limit of '20% of the service tax payable' on utilization of tax credit for payment of service tax on telephone service is not applicable in respect of capital goods Cenvat credit and service tax credit in respect of 17 input services specified in Rule 6(5). We agree with this plea of the appellant as - (a) In terms of the provisions of sub-rule (4) of Rule 6 of the Cenvat Credit Rules, 2004, capital goods Cenvat credit is not permissible only when the capital goods are exclusively used for manufacture of 'exempted goods' or for providing 'exempted service', implying that in a situation where the capital goods are used for providing non exempt taxable service as well as "exempted service" or for manu....