2011 (6) TMI 436 - AT - Central Excise

Penalty - Denial of credit on the security services utilized in the colony of employees of the appellant-assessee - Held that - Security services provided in the colony of the employees of the assessee cannot be treated as input service. However duty for the period from January, 05 to June, 06 demanded by SCN dated 17.09.07 is fully time-barred - Decided against the Revenue. Credit of service tax in respect of service of telephone used in the guest house and the residences of the President and the Vice President of the appellant-assessee - Held that - Revenue appeal of setting aside the order of the Commissioner (Appeals) allowing such credit does not deserve to be accepted in view of the decision in the case Andhra Pradesh Paper Mills Ltd(2011 (1) TMI 590 (Tri)) - Decided against the Revenue.

Summary

Issues:
1. Eligibility of cenvat credit on security services utilized in the colony of employees.
2. Eligibility of cenvat credit on service of telephones in the guest house and residences of the President and Vice President.

Analysis:

Issue 1:
The appeal by M/s.Ambuja Cement Eastern Ltd. challenges the order demanding duty and imposing a penalty after denying credit on security services used in the colony of employees. The department, in a separate appeal, contests the allowance of credit for telephone services in the guest house and residences of key personnel. The appellant asserts that earlier Tribunal decisions supported their belief in credit eligibility, despite a subsequent Bombay High Court ruling against such credit. The appellant argues that the demand for duty is time-barred. The Tribunal acknowledges the High Court's decision against credit for security services in employee colonies but accepts the time-barred defense due to the appellant's genuine belief supported by previous Tribunal decisions.

Issue 2:
Regarding the department's appeal on telephone service credit, the Tribunal rejects the appeal based on precedents from cases involving Andhra Pradesh Paper Mills Ltd. and Greaves Cotton Ltd. The Tribunal finds in favor of allowing the credit for telephone services in the guest house and the residences of the President and Vice President. Consequently, the appellant's appeal is allowed, providing consequential relief, while the department's appeal is dismissed.

In conclusion, the Tribunal's judgment upholds the eligibility of cenvat credit for telephone services but denies the same for security services in employee colonies, citing relevant precedents and the time-barred nature of the demand.