2007 (9) TMI 503 - AT - Service Tax

Cenvat credit - Input service - Mobile Phones provided to Officers of the Company - Held that - mobile phones used by employees and officers of company and tax paid was not is (sic) admissible as Cenvat credit - the assessee did nor produce any proof to establish that the mobile phones were used for providing output service or used in or in relation to manufacture of finished goods - the matter has to be verified by the authorities below before granting Cenvat credit in terms of the Board s Circular - appeal allowed by way of remand.

Summary

Issues:
1. Denial of Cenvat credit for service tax paid on mobile phones provided to company officers.

Analysis:

The appeal in question stemmed from the denial of Cenvat credit in relation to service tax paid on mobile phones provided to officers of the company. The appellant's representative argued that a circular issued by the Board supported the admissibility of such credit, citing relevant tribunal judgments to bolster their case. Notably, the circular specified that credit for service tax on mobile telephone services is permissible if the phones are used for providing output services or in the manufacture of finished goods. The representative referenced tribunal rulings where similar circumstances led to the allowance of Cenvat credit. Conversely, the respondent's representative contended that the original authority needed to verify whether the mobile phones were indeed utilized as outlined in the circular. It was highlighted that no evidence had been presented to substantiate this claim, as acknowledged by the Commissioner.

Upon careful consideration, the presiding judge observed that the appellant had failed to provide proof demonstrating the use of mobile phones for output services or in the manufacturing process, as required by the circular and supported by precedent. While acknowledging the supportive nature of the cited judgments, the judge emphasized the necessity for the authorities to verify the usage of mobile phones before granting Cenvat credit. Consequently, the judge remanded the matter to the original authority for reevaluation in light of the Board's circular and the referenced judgments, with instructions to grant the credit if found eligible as per the law. The directive specified a timeframe of four months for the re-adjudication process to be completed, underscoring the need for a prompt resolution of the issue.