2010 (9) TMI 664 - AT - Service Tax

Waiver of predeposit - Cenvat credit - Capital goods - The impugned capital goods were purchased by the DGM (Projects) at Salem and the credit in respect of duty paid on such goods was taken at Salem - Cenvat Credit Rules, the requirement is that capital goods should be used for providing out put service and that the same should be received in the premises of the provider of the out put service - Service tax assessee having taken registration at multiple locations can distribute the credit available to it to different locations - BSNL as a whole is a service tax assessee, though its different units have taken service tax registration at different places, prima facie they are eligible to take credit in respect of capital goods received at the secondary switching areas in the jurisdiction of the DGM (Projects), Salem, centrally at one place namely Salem - Hence, the prima facie view that the appellants have a good case on merit - Waive the requirement of predeposit during the pendency of the appeal.

Summary

Issues: Jurisdiction of Dy. General Manager (Projects) over secondary switching areas; Eligibility of BSNL to claim credit for duty paid on capital goods.

In the judgment delivered by the Appellate Tribunal CESTAT, CHENNAI, the case involved M/s. BSNL, a public sector undertaking providing telephone services with installations nationwide. The dispute centered around the jurisdiction of the Dy. General Manager (Projects) at Salem over secondary switching areas at Salem, Trichy, Coimbatore, and Kumbakonam. The impugned capital goods were procured by the DGM (Projects) at Salem, with duty credit claimed there. The department contested this credit claiming it was not valid as the goods were directly supplied to the secondary switching areas at Trichy, Coimbatore, and Kumbakonam. The Tribunal analyzed the Cenvat Credit Rules, emphasizing that capital goods must be used for providing output services and received at the service provider's premises. It noted that a service tax assessee like BSNL, with registrations at multiple locations, could distribute credit among them. Considering BSNL's unified status as a service tax assessee despite different units' registrations, the Tribunal found prima facie merit in allowing credit for capital goods received at secondary switching areas under the DGM's jurisdiction in Salem, consolidating it centrally at Salem. Consequently, the Tribunal waived the predeposit requirement pending the appeal, deeming the appellants to have a strong case on merit. The operative part of the order was pronounced on 27-9-2010.