2015 (11) TMI 1349 - AT - Service Tax

CENVAT credit on steel items used for fabrication and erection of hoardings, central medians, bus shelters and unipoles which are erected for fixing advertising hoardings for the purposes of display of advertisements. - movable goods or not - Held that - Even though photographs were produced on going through the photographs, it is difficult to come to a conclusion. Nevertheless it is quite clear that the issue is debatable and on this ground itself extended period could not have been invoked since two ways are possible. It was pointed out by the learned AR that Hon ble High Court of Bombay in the case of Bharti Airtel Ltd. Vs. CCE, Pune-III 2014 (9) TMI 38 - BOMBAY HIGH COURT in somewhat similar circumstances has held that CENVAT credit would not be admissible - Therefore for the normal period, it has to be held that appellant is not eligible for the benefit of CENVAT credit. Since the issue is a debatable one and arguable one and in view of the fact that extended period has been held as not invokable, in my opinion, penalty cannot be imposed. In view of the above discussion, the demand for CENVAT credit within the normal period with interest is upheld and penalty and demand for the period beyond the normal period are set aside. - Decided partly in favour of assessee.

Summary

Issues:
1. Availment of Cenvat Credit on steel items for fabrication and erection of hoardings.
2. Eligibility of Cenvat Credit on steel items used for advertising purposes.
3. Nexus between car insurance and output service for Cenvat Credit.
4. Suppression of facts regarding irregular Cenvat Credit.

Analysis:

Issue 1 - Availment of Cenvat Credit on steel items for fabrication and erection of hoardings:
The appellants, engaged in Advertising Business, availed Cenvat Credit under CCR, 2004, for inputs used in taxable services. A show-cause notice alleged irregular Cenvat Credit on steel items like angles, shapes, sections, etc., used for fabrication of hoardings. The contention was whether such items qualify as capital goods or inputs. The learned advocate argued that the structures were movable and could be relocated, presenting a debatable issue. Referring to a similar case, it was noted that the Hon'ble High Court held against the admissibility of Cenvat Credit. Ultimately, it was held that the appellants were not eligible for Cenvat Credit during the normal period, but since the issue was debatable, penalty imposition was deemed inappropriate.

Issue 2 - Eligibility of Cenvat Credit on steel items used for advertising purposes:
The primary issue revolved around whether steel items used for advertising structures could be considered capital goods or inputs for Cenvat Credit. The debate centered on the movability of the structures and their classification under the Central Excise Tariff Act. Despite arguments regarding the nature of the structures, the decision was made against the eligibility of Cenvat Credit during the normal period due to the debatable nature of the issue.

Issue 3 - Nexus between car insurance and output service for Cenvat Credit:
Another aspect raised was the availing of Cenvat Credit on car insurance, with a contention that there was no nexus between the insurance and the output service of Advertising Agency. The failure to produce original documentation further complicated the matter. This issue highlighted the necessity of establishing a direct link between input services and the output service for Cenvat Credit eligibility.

Issue 4 - Suppression of facts regarding irregular Cenvat Credit:
The final issue addressed the alleged suppression of facts by the appellants concerning the irregular availing of Cenvat Credit. The show-cause notice accused the appellants of intentionally availing credit on ineligible items. However, due to the debatable nature of the main issue and the non-invocation of the extended period, the penalty was not imposed, and the demand for Cenvat Credit within the normal period was upheld while setting aside the penalty and demand beyond the normal period.

This analysis of the judgment from the Appellate Tribunal CESTAT Bangalore showcases the intricate legal considerations surrounding the availment of Cenvat Credit in the context of Advertising Business, emphasizing the importance of proper documentation, nexus establishment, and the debatable nature of certain issues impacting penalty imposition.