TaxTMI 
TaxTMI 
2024 (6) TMI 1423
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....,P. (West) Telecom Circle, 3'd floor, Brahampuri Telephone Exchange, Meerut-250002 under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 73(1) of the Finance Act, 1994. (ii) I order recovery of interest on the above said amount of demand from the Noticee under Rule 14 of CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994. (iii) I impose a penalty of Rs. 44,94,672/- (Rupees Forty Four Lakh Ninety Four Thousand Six Hundred Seventy Two only) on M's Bharat Sanchar Nigam Limited 0/o G.M. (Cellular Mobile Telecom Services), U.P. (West) Telecom Circle, 3rd Floor, Brahampuri Telephone Exchange, Meerut-250002 under Rule 15(1) of CENVAT Credit Rules, 2004 read with Section 76(1) of the Finance Act, 1994" 2.1 Appellant is registered for providing "Telecommunication Services". They are availing the CENVAT credit of Central Excise duties and Service tax under the provisions of CENVAT Credit Rules, 2004 2.2 Based on Internal Audit (IAR No. 36/ST/2011-12 dated 22.03.2012) a Show Cause Notice dated 17.10.2013 for the period Oct.'2009 to March'2011 was issued to them for demand and recovery of CENVAT credit of Rs.3,96,27,422/- ....
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..... Aggrieved appellant have filed this appeal. 3.1 We have heard Shri Kartikeya Narain, Advocate for the appellant and Shri Manish Raj, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsel submits: • Cenvat credit cannot be denied at the user end as has been held in the following cases: • Laxmindco Steel P Ltd [2006 (202) ELT 629] • Creative Enterprises [2009 (23% ELT 785 (Guj)] • J K industries [2008 (223) ELT 372 (Raj)] • Sterlite Industries Ltd. [2004 (173) ELT 28] • Eveready Industries [2000 (120) ELT 379] • CENVAT and Penalties charges are two different things. 3.3 Authorized representative reiterates the findings recorded in the impugned order 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments 4.2 Impugned order records the findings as follws: "6. ..... In the present case the following issues are required to be decided by me:- (i) Whether the Noticee (M/s BSNL) had wrongly and irregularly availed and utilized Cenvat Credit of Service tax amounting to R....
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.... 9. I find that the period of dispute in the present case relates to the financial years 2013-14 and 2014-15 and during the relevant period of dispute, the service tax was payable on accrual basis and not on receipt basis and Rule 4(7) of the Cenvat Credit Rules, 2004 provides that Cenvat Credit shall be allowed on or after the day on which invoice, bill or challan of service provider, as specified in rule 9 of the Cenvat Credit Rules, 2004, is received. The second proviso to Rule 4(7) further states that if payment of value of service and tax thereon is not made to the service provider within three months from the date of invoice, bill or challan, the Cenvat credit already taken should be reversed by paying 'amount" equal to Cenvat Credit availed on such input service. If at a later date, payment is made to the service provider by the manufacturer or output service provider who had reversed the Cenvat credit, he can take credit of the amount equal to Cenvat credit reversed earlier. I further find that if service is not provided fully or partly or if the amount of invoice is renegotiated due to deficiency in service or in terms of contract, the service provider may refu....
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....rd any documentary evidence to prove that their service providers i.e. M/s Nokia Siemens Network (P) Ltd and M/s Ericsson India (P) Ltd had actually paid the service tax on the gross value of the rendered services without deduction of penalty amount, as shown in the invoices of the said service providers and on the basis of which Ms BSNL had actually availed and utilized the 100% Cenvat credit of Service tax. Therefore, I hold that M/s BSNL is not entitled to Cenvat credit of Service Tax attributable to the penalty amount which was deducted by Ms BSNL from the billed amounts of the service providers and was never paid to the said service providers and consequently, I hold that M/s BSNL had wrongly and irregularly availed and utilized Cenvat credit of Service Tax amounting to Rs. 2,08,47,037/- on account of Liquidation Damages: LD penalty on the basis of the invoices of service providers pertaining to AMC to whom payments were made after deducting certain amount as "penalty‟ and the above said amount of Cenvat credit is required to be recovered from Ms BSNL under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 73(1) of the Finance Act, 1994. 10. So far as t....
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....of the Finance Act; I find that by virtue of the exclusion clause (A) to the definition of "inputs" as provided under Rule 2(k) of the Cenvat Credit Rules, 2004, the diesel is not an eligible input for availing Cenvat credit under the Cenvat Credit Rules, 2004. As regards "electricity", as the same is not an excisable commodity, therefore, no credit of service tax is available as input, in respect of electricity. Therefore, the input service performed through consumption of diesel or electricity cannot be construed as a valid input service and I hold that the credit of service tax availed by the Noticee against the invoices issued by their infra service providers, on account of reimbursement cost of diesel/power and fuel expenditure, is not admissible to them in terms of Rule 2(k) and Rule 3 of the Cenvat Credit Rules, 2004. 11. The Noticee has contended that as per the agreement, they had not per-se procured the diesel or electricity as such from the Tower companies but the payment made in this connection was in the form of reimbursement of cost incurred by the Tower Companies for providing the infrastructure support services. So far as this contention of the Not....
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....electricity connections as per agreements; that without diesel and electricity, it was not possible to provide the infrastructure support services and hence the diesel and electricity were the integral parts of the services received by them from the above said services providers. So far as this contention of the Noticee is concerned, the same being devoid of merits, has no credence. I find that the cenvat credit of duty/tax is admissible in respect of only tnose inputs/input services whick are covered under the provisions of the Cenvat Credit Rules, 2004 and in the present case since diesel was not an eligible input for availing Cenvat credit under the Cenvat Credit Rules, 2004 and similarly "electricity", was not an excisable commodity, therefore, no credit of service tax is admissible to the Noticee on the diesel and electricity in terms of Rule 2(k) and Rule 3 of the Cenvat Credit Rules, 2004. So far as the contention of the party that without use of diesel and electricity it was not possible for the service providers to provide the uninterrupted infrastructure support services and that the diesel and electricity were the integral parts of the said infrastructure support service....
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....quired for providing such service but diesel consumption is required for generating electricityAppellants also argued that property in goods (diesel) was transferred to service recipient before it was consumed for producing electricity and therefore on that count also, its value was not liable to Service Tax - Prima facie value of diesel not includible in assessable value of impugned service - Sections 4 and 35F of Central Excise Act, 1944 as applicable to Service Tax vide Section 83 of Finance Act, 1994. [paras 5, 6] Similarly, the Hon'ble CESTAT, Mumbai in the case of Reliance Infratel Ltd vs Commissioner of Service Tax, Mumbai-I reported as 2015 (38) STR 984 (Tri-Mumbai) while allowing the Cenvat credit on inputs or capital goods for providing passive telecom infrastructure by way of Telecom towers, has held that the cenvat credit on inputs or capital goods was admissible to the appellants except for oil and petrol in Rule 2(k)(ii) of the Cenvat Credit Rules, 2004 The relevant portion of the above judgement is reproduced below :- Cenvat credit- Inputs - Assessee providing passive telecom infrastructure by way of Telecom towers, to various cellular telecom o....
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....ion, the Revenue cannot be blamed, if the amount wrongly availed by way of MODVAT credit by the respondents is recovered with interest thereon. It is also pertinent to note that the Revenue had given 30 days' time to return the said amount to the respondents who had wrongly availed MODVAT credit on the HSD oil used as an input. If anyone who had repaid the amount wrongly availed within 30 days from the date on which Section 112 of the 2000 Act got the President's assent, that assessee had not to pay any interest on the amount of duty availed by him wrongly. But those who had availed the MODVAT credit on the HSD oil used as an input and did not return the said amount even within 30 days from the date on which the President had given assent to the enactment of Section 112 of the 2000 Act, had to return the amount wrongfully retained by them with interest at the rate of 24% p.a. In our opinion, such a course, adopted by the Revenue for recovery of the amount which was legitimately claimed by the Revenue, cannot be said to be bad-in-law." 15. I find that as per the provisions of Rule 9(5) and Rule 9(6) of the Cenvat Credit Rules 2004, the burden of proof regarding the admissib....
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....ind the Noticee had contravened the provisions of Rules 2, 3 & 9 of the Cenvat Credit Rules, 2004 and have rendered themselves liable to penal action under Rule 15(1) of the Cenvat Credit Rules, 2004 read with Section 76(1) of the Finance Act, 1994. 18. The Noticee has contended that they being a Government Undertaking, there cannot be any intent to evade payment of Service Tax on their part and in this regard, they have also relied upon several judgements. So far as this contention of the Noticee is concerned, I find that the Noticee had earlier been issued a show cause notice dated 17.10.2013 amongst others on these issues also and inspite of the said show cause notice, the Noticee continued to avail and utilize inadmissible Cenvat credit of Service tax on the amount of penalty as well as on account of reimbursement of fuel expenditure. Therefore, the Noticee is liable to penal action, as rightly charged in the impugned show cause notice." 4.3 Impugned order has framed the issues for decision in para-6. 4.4 In respect of issue at Sl No 1, admittedly the appellant ahs not paid the amount indicated in the invoices of the service provider. The invoice value has been reduced by....
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....ion in respect of each of the above-mentioned issues is as under :- (a) ........ (b) In the cases where the receiver of service reduces the amount mentioned in the invoice/bill/challan and makes discounted payment, then it should be taken as final payment towards the provision of service. The mere fact that finally settled amount is less than the amount shown in the invoice does not alter the fact that service charges have been paid and thus the service receiver is entitled to take credit provided he has also paid the amount of service tax, (whether proportionately reduced or the original amount) to the service provider. The Invoice would in fact stand amended to that extent. The credit taken would be equivalent to the amount that is paid as service tax. However, in case of subsequent refund or extra payment of service tax, the credit would also be altered accordingly." In terms of the above Rule as clarified by the Board, the quantum of credit availed has to be limited to actual amount of service tax paid in respect of such invoices evidencing the payment of service tax. The fact that invoices were issued indicated particular taxable value and service tax paya....
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....ce, the bill or as the case may be, challan referred to in Rule 9. In view of this clear legal position the facts of the case are to be examined. We find that the Commissioner (A) has given a summary finding that the respondent have availed credit correctly and the department had not produced any evidence or irregularity which is the violation of above mentioned sub-rule. We have perused certain sample entries of verification made by original authority with reference to date of payment of value for service/service tax to the provider of services. It is very clear that at least in respect of some of the bills the respondent have availed and even utilized credit before the service tax was paid by them by cheque. In terms of the above legal position, it is necessary for the respondent to establish with documentary evidence that they have availed Cenvat credit on input services after the date on which they made payment of value for such services and also service tax has been paid to the provider of services before that date. This obligation has clearly been stipulated under sub-rule (6) of Rule 9. Accordingly, we find that it is necessary to establish the payment of value as well as ta....