2011 (7) TMI 485 - AT - Service Tax

Penalty - Under Rule 15 of the CENVAT Credit Rules 2004 - Disallowed total credit of Rs.21, 360/- of service tax paid on (i) telephone service (ii) vehicle maintenance (iii) fixed telephones and (iv) courier agency -Held that telephone service having been used for sales promotion this service is an eligible input service as it is a service used in connection with the activity of business of manufacture of final products - Since there is no bifurcation of the amounts denied in respect of four services the duty demand has to be requantified after extending credit of service tax paid on telephone service for which purpose remit the case to the adjudicating authority - Since credit is being extended in respect of tax paid on telephone service penalty also is required to be requantified.

Summary

The Appellate Tribunal CESTAT, Chennai allowed the appeal filed against the denial of credit of service tax paid on telephone service. The Tribunal held that the telephone service was eligible as an input service used for sales promotion in connection with the business activity of manufacturing final products. The case was remitted to the adjudicating authority for requantification of duty demand and penalty in light of the allowed credit for telephone service. The appeal was allowed accordingly.