2018 (3) TMI 708 – CESTAT CHENNAI – TMI – CENVAT credit – inputs/capital goods – input services – duty paid on towers and shelters – exemption under N/N. 4/2004-ST dated 31.3.2004 on Telecom Services provided to SEZ units.
–
Whether the credit availed on inputs/capital goods as well as towers and shelters is eligible or not? – time limitation – Held that: – credit is not eligible – as regards limitation, the issue whether credit is admissible on inputs / capital gods as well as towers / shelters was contentious for a long time and had travelled upto the Larger Bench of the Tribunal and thereafter to higher fora. Also, there is nothing to establish that appellant had availed credit suppressing facts with intent to evade duty – extended period cannot be invoked – penalties also set aside – the demand for the normal period will sustain, however, the penalties for the normal period are set aside.
–
Disallowance of credit on input services – Held that: – the issue stands covered by
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
pellant Ms. P. Hemavathi, Commissioner (AR) for the Respondent ORDER Per Bench The issue arising for consideration in all these appeals being same, they were heard together and are disposed by this common order. 2. The appellants are engaged in providing mobile phone services and are registered with the Service Tax Department under Telecommunication Services. During the course of audit, it was noticed that they availed credit on inputs and capital goods as well as duty paid on towers and shelters and credit availed on various input services. It was also noticed that they had wrongly availed exemption under Notification No. 4/2004-ST dated 31.3.2004 on Telecom Services provided to SEZ units. Show cause notices were issued proposing to recover wrongly availed credit along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand, interest and penalties and hence these appeal. Appeal No. ST/244 and 301/2010 3. The details of the s
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
2,488,524 Sub Total 3,294,682 0.00 3,294,682 Grand Total 176,690,364 94,722,210 3,294,682 4. On behalf of the appellants, ld. Counsel Shri Raghavan Ramabhadran reiterated the grounds of appeals. He fairly conceded that the issue whether the appellant is eligible for credit on inputs and capital goods has been decided against the appellants by the Tribunal in the case of Bharti Airtel Vs. CCE 2012 (4) TMI 362 CESTAT Mumbai. He submitted that, however, part of the demand would fall within the extended period of limitation. The issue whether credit is admissible on duty paid on inputs and capital goods for erection of mobile towers was contentious during the relevant period. The appellant had availed credit on the bonafide belief that credit is admissible on the angles, channels etc. used for erecting structures/towers. The Tribunal in the appellant s own case for earlier period had set aside the demand on the ground of limitation as well as the penalties for the normal period. He prayed
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
had availed credit on various input services such as construction, rent-a-cab service etc. which were used for providing the output service. The period involved is prior to 1.4.2011 and therefore the said credit is eligible as these services have been availed for providing output services. These services are nothing but activities relating to business of the appellant. Further, the Tribunal in the Final Order cited supra has allowed credit on the very same services. 3.3 With regard to the denial of exemption under Notification No.4/2004, the ld. Counsel submitted that the department has sought to deny the exemption alleging that service had not been consumed within the SEZ. He argued that the mobile subscriptions have been availed within SEZ unit itself. Though the facility of such mobile phones may be used outside the SEZ, the same cannot be a ground to deny the benefit of exemption as per the notification. He adverted to the notification, and submitted that the said notification exe
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
also. 5. Heard both sides. 6. The first issue for consideration is whether the credit availed on inputs/capital goods as well as towers and shelters is eligible or not. The said issue stands covered by the decision of the Larger Bench and Hon ble High Court of Bombay cited supra as well as the appellant s own case cited supra. Following the same, we hold that credit is not eligible. The appellant has argued that the demand raised invoking extended period cannot sustain for the reason that the appellant had availed credit on bonafide belief that such credit is admissible. On perusal of records as well as after hearing the submissions, we find that the issue whether credit is admissible on inputs / capital gods as well as towers / shelters was contentious for a long time and had travelled upto the Larger Bench of the Tribunal and thereafter to higher fora. Taking note of these facts, we find invocation of extended period is without grounds. There is nothing to establish that appellant ha
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ng to business . Following the above decision in Vodafone Essar South Ltd., we hold that credit is admissible. 6.2 With regard to the denial of exemption under Notification No.4/2004 dated 31.3.2004 alleging that the telecom services are not consumed wholly within the SEZ Unit, we find that the mobile services are provided by the appellant to SEZ units. The department does not have a case that the subscribers are outside SEZ units. Merely because the facility of the mobile phone is used outside the SEZ unit also, the exemption in terms of Notification No. 4/2004 cannot be denied. Further, the period involved is after 10.2.2006 when the SEZ Act 2005 came into existence. Section 26 of the Act grants various exemptions from taxes and duties to SEZ. Section 51 of the Act provides that the Act shall have overriding effect. Taking into consideration all these aspects, we are of the considered opinion that the denial of exemption is unjustified. The demand raised on this count therefore canno
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
After due process of law, the original authority disallowed the credit and confirmed the demand in respect of credit availed on inputs / capital goods and towers / shelters. The demand in respect of input services also was confirmed. However, while confirming the demand in respect of input services, with regard to an amount of ₹ 10,69,684/-, the Commissioner invoked the provisions relating to inputs to deny the credit. Against this finding of the Commissioner, invoking wrongly the provisions of inputs to deny credit availed on input services, department has filed Appeal No. ST/610/2010. Aggrieved by the disallowance of credit and confirmation of demand on inputs, capital goods as well as input services, the assessee has filed appeal No. ST/634/2010. For convenience, the details of show cause notice, period of dispute and the amount involved is given in the Table. Nature of Demand SCN Date of Notice Period Period Amount (Rs.) Demand within time Rs. INPUT / CAPITAL GOODS CREDIT Cre
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
or erecting the towers and shelters and PFBS for the period April 2008 to March 2009. The period involved being prior to 1.4.2011, we hold that the services would fall within definition of input services. The disallowance of credit is unjustified. The impugned order to extend disallowing of credit on input services is set aside. However, while disallowing the credit on input services, the Commissioner has wrongly involved the provisions pertaining to inputs for which reason alone the department has filed appeal No. ST/610/2010. This finding of the Commissioner though erroneous for wrong invocation of legal provision cannot sustain on merits. The department appeal is accordingly disposed. 12. In the result, Appeal Nos. ST/244 & 301/2010 are partly allowed. Appeal No. ST/634/2010 is partly allowed Appeal No. 610/2010 is disposed. 13. Miscellaneous application filed by the department for change of cause title is allowed. ( Operative portion of the order was pronounced in open court )
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =