2018 (1) TMI 1361 - AT - Service Tax

CENVAT Credit - inputs/capital goods - towers, tower materials, shelters and prefabricated building - Held that - The Larger Bench of this Tribunal in the case of Tower Vision India Pvt. Limited vs. CCE (Adj.), Delhi 2016 (3) TMI 165 - CESTAT NEW DELHI (LB) has held that the assessee is not entitled to avail Cenvat credit on towers, shelters, prefabricated structures or tower materials - Credit not allowed. Penalty - Held that - The issue whether the appellant is entitled to avail Cenvat credit or not was in dispute and there were divergent views, in that circumstance, no penalty is imposable on the appellant - penalty set aside. Appeal allowed in part.

Summary

Issues:
1. Denial of Cenvat credit on towers, tower materials, shelters, and prefabricated buildings.
2. Interpretation of Rule 2(k)(ii) / 2(a) of Cenvat Credit Rules, 2004.
3. Applicability of earlier tribunal decisions on similar cases.
4. Imposition of penalty on the appellant.

Analysis:

Issue 1: Denial of Cenvat credit on specific items
The appellant appealed against the denial of Cenvat credit on towers, tower materials, shelters, and prefabricated buildings, contending that these items were wrongly classified as neither input nor capital goods. The appellant argued that a previous decision by the Larger Bench of the Tribunal, which supported their claim, had been upheld by the Chhattisgarh High Court, entitling them to avail Cenvat credit.

Issue 2: Interpretation of Cenvat Credit Rules
The counsel for the appellant emphasized that the disputed items had been considered immovable property, leading to the denial of Cenvat credit. However, the Tribunal referred to the decision in the case of Tower Vision India Pvt. Limited vs. CCE (Adj.), Delhi, where it was held that Cenvat credit on towers, shelters, prefabricated structures, and tower materials was not permissible. Consequently, the Tribunal ruled that the appellant was not entitled to avail Cenvat credit on the mentioned items, upholding the denial.

Issue 3: Applicability of previous tribunal decisions
The Tribunal considered the conflicting views on the eligibility of Cenvat credit for the disputed items. Despite the appellant's reliance on a previous decision, the Tribunal followed the decision of the Larger Bench, which had disallowed Cenvat credit on similar items. This consistency led to the rejection of the appellant's claim for Cenvat credit.

Issue 4: Penalty imposition
Given the disputed nature of the issue and the presence of divergent views, the Tribunal decided not to impose a penalty on the appellant. The Tribunal reasoned that since the entitlement to Cenvat credit was a contentious issue with differing opinions, it would be unjust to penalize the appellant. Consequently, the penalty imposed on the appellant was set aside, ensuring a fair outcome in light of the circumstances.

In conclusion, the appeal was disposed of based on the Tribunal's interpretation of the Cenvat Credit Rules and the precedents set by previous decisions, ultimately leading to the disallowance of Cenvat credit on the specified items while relieving the appellant from the penalty.