2017 (6) TMI 375 - AT - Service Tax

CENVAT credit - excise duty paid on various items used in or as towers and shelters - denial on the ground that these items are not capital goods or inputs - Held that - the issue of admissibility of CENVAT Credit has been decided against the assessee by the Larger Bench - the demand for the extended period and penalties have been set aside - matter remanded to the Commissioner only for quantification of demand - appeal allowed by way of remand.

Summary

Issues Involved:
Admissibility of Cenvat Credit on towers, shelters, and related parts as capital goods or inputs; Denial of CENVAT credit by the Commissioner; Challenge of the Order-in-Original before the Court; Difference of opinion between the Members of the Tribunal on the admissibility of Cenvat Credit; Reference to the Hon'ble President for a third member's opinion; Constitution of a Larger Bench to resolve the difference of opinion; Decision of the Larger Bench against the assessee on the admissibility of Cenvat Credit; Setting aside of demands for the extended period and penalties; Final disposal of the appeal with quantification of demand by the Commissioner.

Analysis:

The appeal was filed by M/s. Vodafone Essar South Ltd. against the Order-in-Original passed by the Commissioner of Central Excise, Meerut-I, denying CENVAT credit on towers, shelters, and related parts used in providing output services. The Appellant availed Cenvat Credit on Service Tax paid on input services, Central Excise duty paid on inputs, and Capital Goods, utilizing it to pay the service tax liability. The Commissioner issued Show Cause Notices denying credit on various items, which were later adjudicated, allowing credit on some items but confirming demands on others, including utilization beyond the limit. The Appellant subsequently availed credit on these items based on legal advice, leading to further Show Cause Notices and demands confirmed in the Order-in-Original dated 30.01.2009.

The Tribunal heard the appeal challenging the demand on merit and limitation. A difference of opinion arose between the Members of the Tribunal regarding the admissibility of Cenvat Credit post-2006, leading to a reference to the Hon'ble President for a third member's opinion. A Larger Bench was constituted to resolve the difference of opinion, ultimately deciding against the assessee on the admissibility of Cenvat Credit. The demands for the extended period and penalties were set aside as per a previous Division Bench's Order. The appeal was finally disposed of, upholding the demand for inadmissible Cenvat Credit within the normal period of limitation, setting aside the demand for the extended period, and nullifying all penalties. The Commissioner was directed to quantify the demand within 60 days from the date of the Order.

In conclusion, the appeal resulted in a decision against the assessee regarding the admissibility of Cenvat Credit, while demands for the extended period and penalties were set aside. The final disposal involved remanding the appeal to the Commissioner for quantification of the demand in line with the decision reached by the Tribunal.