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2014 (9) TMI 647 - AT - Service TaxCENVAT Credit - inputs and input services - availment of Cenvat Credit on parts of Towers, BTS Cabins etc. - output services being Passive Telecom Infrastructure - demand of interest on reversal of cenvat credit - Held that - As per Rule 2 (k) (ii) of the Cenvat Credit Rules, 2004 all goods are entitled for Cenvat Credit which are used for providing any output service. In this case nowhere it is disputed by any of the parties that the tower/BTS cabins were not used by the appellant for providing service namely Business Auxiliary Service . Therefore, the Cenvat Credit cannot be denied. Adjudicating authority has heavily relied upon the decision of Bharti Airtel Ltd. 2012 (4) TMI 362 - CESTAT, MUMBAI ; in the said case the facts are totally different to the facts of the case in hand. In fact in that case appellant was engaged in providing cellular telephone service and as per Board Circular No. 137/315/2007 CX-4 dt. 26.2.2008, it is clarified that no Cenvat Credit on towers and BTS cabin is permissible for Cellular Phone Service Provider. - In the instant case, the towers and the cabins are used by the appellant as Passive Telecom Infrastructure for providing output service namely Business Auxiliary Service as declared by the appellant to the department in 2005 and agreed to by the department in their reply dt. 20.9.2005. Appellant are entitled for input service credit on towers and cabin, which have been used by the appellant for providing output service under the category of Business Auxiliary Service in the facts of the case. - Decided in favor of assessee. Levy of Interest on reversal of unutilized cenvat credit - Held that - The case in hand although the appellant has taken the Cenvat Credit, the same has been reversed on pointing out therefore the facts of this case are similar to the case of Bill Forge Pvt. Ltd. 2011 (4) TMI 969 - KARNATAKA HIGH COURT and distinguishable from the facts of the case of Ind-Swift Laboratories Ltd. (supra), as in the case of Ind-Swift Laboratories Ltd. 2011 (2) TMI 6 - Supreme Court , the Cenvat Credit was taken by the assessee on the strength of fake invoice and credit was not reversed by them but it was recovered by way of demanding duty. Therefore, the said facts are not applicable to the facts in hand. In these terms, we hold that the appellants are not liable to pay interest for wrongful availment of Cenvat Credit which has been reversed before utilization by the appellant - Decided in favor of assessee.
Issues Involved:
1. Denial of CENVAT Credit on Towers/parts. 2. Classification of the appellant's service under Business Auxiliary Service. 3. Applicability of extended period of limitation. 4. Reversal of CENVAT Credit on capital goods used in Jammu & Kashmir and associated interest liability. Issue-wise Detailed Analysis: 1. Denial of CENVAT Credit on Towers/parts: The appellant, engaged in providing 'Passive Telecom Infrastructure' to Cellular Telecom Operators, was denied CENVAT Credit on towers/parts used for this purpose. The adjudicating authority relied on precedents like Bharti Airtel Ltd. and Hutchison Max Telecom P. Ltd., concluding that the appellant was not entitled to CENVAT Credit as the goods became immovable property and were not excisable. However, the appellant argued that as a service provider under Business Auxiliary Service, they were entitled to CENVAT Credit per Rule 2(k)(ii) of the CENVAT Credit Rules, 2004. The Tribunal concluded that the towers and cabins were used for providing output service, thus making the appellant eligible for CENVAT Credit under Rule 2(k)(ii) of the CENVAT Credit Rules, 2004. 2. Classification of the appellant's service under Business Auxiliary Service: The appellant's activity of providing 'Passive Telecom Infrastructure' was classified by the Revenue under Business Auxiliary Service. The Tribunal noted that the appellant had sought and received clarification from the Revenue in 2005, confirming the classification. Therefore, the Tribunal upheld that the appellant's service fell under Business Auxiliary Service, making them eligible for CENVAT Credit on inputs used for providing this service. 3. Applicability of extended period of limitation: The first show cause notice was issued for the period 2006-07 to 2010-11 on 22.10.2011, invoking the extended period of limitation. The Tribunal found that the appellant had not suppressed any facts and had sought clarification from the Revenue before providing the service. Hence, the demand for the extended period was deemed unsustainable. 4. Reversal of CENVAT Credit on capital goods used in Jammu & Kashmir and associated interest liability: The third show cause notice denied CENVAT Credit on capital goods used in Jammu & Kashmir. The appellant contended that they reversed the credit immediately upon being pointed out without utilizing it. The Tribunal referred to the decision in Commissioner of C.Ex., & S.T., LTU, Bangalore Vs. Bill Forge Pvt. Ltd., which held that if CENVAT Credit is reversed before utilization, no interest is payable. The Tribunal concluded that the appellant was not liable to pay interest as the credit was reversed before utilization. Conclusion: The Tribunal set aside the impugned order, allowing the appeal with consequential relief. It held that the appellant was entitled to avail CENVAT Credit on the towers/parts used for providing Business Auxiliary Service and was not liable to pay interest for the reversed credit. Consequently, penalties were not leviable.
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