2013 (5) TMI 81 - AT - Service Tax

Cenvat Credit on Accessories used in erection of mobile towers on behalf of M/s Tata Teleservices Ltd. - Inputs / input service - held that - It is not disputed that M/s Vector Technologies have no connection whatsoever with the appellant company. There is nothing on record to suggest that Tata Teleservices, Mumbai placed purchase order for feeder cable with the condition that they should be supplied with cable assembly accessories only through Vector Technologies. - prima facie, it cannot be said that supply of cable assembly accessories made by the appellant to M/s Vector Technologies amount to input service with respect to the feeder cable manufactured and supplied by the appellant to M/s Tata Tele Services, Mumbai. - No stay - pre-deposit ordered.

Summary

Issues:
Appellant seeking stay of demand and penalty confirmed by adjudicating authority regarding supply of cable assembly accessories.

Analysis:
The appellant, a manufacturer of RF Feeder Cable, claimed that the cable assembly accessories supplied by them to M/s Tata Teleservices Ltd. should be considered as 'input' for which they should receive benefits. However, the impugned order confirmed the demand in relation to these accessories supplied through M/s Vector Technologies. The appellant argued that the accessories were meant for Tata Teleservices Ltd., Mumbai, and input credit should be granted based on relevant invoices. The Revenue opposed the application, stating that Vector Technologies was an independent company not connected to the appellant, and the purchase order did not specify that the accessories were for Tata Teleservices Ltd. The appellant presented a purchase order mentioning delivery as per Tata Teleservices Ltd.'s requirement, but the Tribunal found no evidence to suggest a direct link between the appellant and Tata Teleservices Ltd. The Tribunal concluded that the supply of accessories through Vector Technologies did not qualify as an input service for the feeder cable manufactured by the appellant, thus denying the stay application and requiring the deposit of the demanded amount within four weeks.

This case involved the interpretation of whether the cable assembly accessories supplied by the appellant to M/s Vector Technologies for eventual use by M/s Tata Teleservices Ltd. qualified as 'input' for the appellant's manufacturing process. The Tribunal analyzed the purchase orders and submissions from both parties to determine the connection between the appellant, Vector Technologies, and Tata Teleservices Ltd. The Tribunal found that there was no direct evidence to establish that the accessories supplied through Vector Technologies were specifically intended for Tata Teleservices Ltd. in relation to the feeder cable assembly. As a result, the Tribunal held that the appellant did not demonstrate a prima facie case for granting input credit, leading to the dismissal of the stay application and the requirement for the deposit of the demanded amount within a specified timeframe.

The decision emphasized the importance of establishing a clear link between the supply of accessories and the manufacturing process for which input credit is sought. Despite the appellant's arguments and submission of relevant invoices and purchase orders, the Tribunal focused on the lack of direct evidence connecting the supply chain of accessories to the manufacturing process of the feeder cable for Tata Teleservices Ltd. The judgment highlighted the need for transparency and direct correlation in claiming input credit, ultimately resulting in the dismissal of the appellant's stay application and imposition of the deposit requirement. The case underscored the significance of substantiating claims with concrete evidence to support eligibility for benefits under the Central Excise Tariff Act, 1985.