2009 (5) TMI 80 - AT - Service Tax

Input Services Burden of Proof Cenvat Credit Mobile Phones held that - it is for the department to prove that mobile phones were not used in or in relation to manufacture - the observation of the Original Adjudicating Authority about the Board s Circular is not correct - Cenvat credit of service tax on mobile phones is admissible

Summary

Issues:
- Appeal against allowing Cenvat credit of service tax on mobile phones by the Commissioner (Appeals).

Analysis:
The judgment dealt with an appeal by the Revenue against the decision of the Commissioner (Appeals) allowing Cenvat credit of service tax on mobile phones. The Commissioner had based the decision on the argument presented by the appellants, citing a Tribunal decision in a similar case. The Commissioner noted that the adjudicating authority failed to consider the relevant circular and burden of proof issues. The Commissioner correctly observed that the burden of proof lies with the department to show that the mobile phones were not used in or in relation to manufacturing. Additionally, the judgment referred to a High Court decision holding that Cenvat credit of service tax on mobile phones is admissible. The Tribunal found no merit in the Revenue's appeal and rejected it based on the above considerations.

The Commissioner's decision was supported by the Tribunal, emphasizing the importance of the department proving the non-usage of mobile phones for manufacturing purposes. The Tribunal also highlighted the incorrect observation made by the Original Adjudicating Authority regarding the Board's Circular. The judgment referenced a High Court ruling that further strengthened the case for allowing Cenvat credit on service tax paid for mobile phones. Ultimately, the Tribunal found no valid grounds in the Revenue's appeal and dismissed it accordingly.