2017 (12) TMI 1603 - AT - Service Tax

CENVAT credit - capital goods - duty paying invoices - wrong mention of details - the invoices for the capital goods mentioned BSNL, Puducherry Office, whereas the said capital goods have been despatched and utilized in various exchanges and installations of BSNL, various places at Pondicherry - Held that - Similar disputes came before the Tribunal in the appellant s own case M/S BHARAT SANCHAR NIGAM LIMITED VERSUS CCE, JAIPUR 2017 (5) TMI 896 - CESTAT NEW DELHI , where it was held that In the absence of any allegation of diversion of capital goods for other than intended purpose or their clearance to third party, the Revenue is not justified in denying credit on such capital goods which are admittedly installed and utilized for providing taxable output service - Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute over credit on capital goods availed by the appellants.

Analysis:
The dispute in the present appeal revolves around the denial of credit on capital goods by the Revenue due to discrepancies in the invoices mentioning BSNL, Puducherry Office, while the goods were dispatched to various exchanges and installations of BSNL in different locations at Pondicherry. The Tribunal referred to a similar case, BSNL Vs. CCE, Jaipur, where it was observed that there was no dispute regarding the eligibility of the appellant for Cenvat credit on the capital goods. The dispute arose because the goods were cleared to various premises for installation, even though the credit was taken indicating the registered premises. The Revenue sought to recover the credit availed on these goods under Rule 3(5) of the Cenvat Credit Rules, 2004. However, the Tribunal found no legal justification for such recovery as there was no evidence of availing credit on ineligible goods or diversion to a third party. The capital goods were installed and utilized by the appellant for taxable services in different locations, and the objection by the Revenue was deemed to be on technical grounds only.

The Tribunal highlighted that the Revenue's presumption that all capital goods were received at a single registered premises and then cleared to unregistered premises lacked support. It was noted that the appellant had centralized registration at Jaipur, and the equipment and capital goods were intended for installation in various distant locations from Jaipur. The Tribunal emphasized that in the absence of any diversion of goods or clearance to a third party, the Revenue was not justified in denying credit on goods that were installed and utilized for providing taxable output services. The Tribunal also pointed out that the proviso to sub-Rule (5) of Rule 3 of Cenvat Credit Rules, 2004 exempted the provider of output services from paying the credit amount when capital goods were removed outside the premises. Considering that the appellant was paying service tax on services rendered from various premises using the credited capital goods, the Tribunal concluded that there was no basis for demanding or recovering the credit availed by the appellant on such goods.

In light of the similarities with the previous case and the lack of justification for denying credit, the Tribunal held that the denial of credit was not justified. Consequently, the impugned order was set aside, and the appeal was allowed.