2018 (4) TMI 1108 - AT - Service Tax

CENVAT credit - iron and steel items which were used for fabrication and erection of telecommunication towers - cabs used for official duties of the employees - Held that - Larger Bench of the Tribunal in the case of Tower Vision India Pvt. Ltd. Vs. Commissioner of Central Excise 2016 (3) TMI 165 - CESTAT NEW DELHI (LB) has held that the assessees are not eligible for such credit on the MS steel, angles and other items used for construction of towers etc. - credit not allowed. Rent a cab service - Held that - rent a cab service has been availed by the appellant for their employees to undertake the official trip which is relatable to their output telecommunication services - credit allowed. Penalties - Held that - the dispute involved was subject matter of various decisions and finally was referred to a Larger Bench of the Tribunal for resolution - penalty set aside. Appeal allowed in part.

Summary

Issues:
1. Denial of CENVAT credit on iron and steel items used for telecommunication towers.
2. Eligibility of CENVAT credit on tax paid for cabs used for official duties.

Analysis:
1. The first issue pertains to the denial of CENVAT credit on iron and steel items used for the fabrication and erection of telecommunication towers. The Tribunal referred to the decision in the case of Tower Vision India Pvt. Ltd. Vs. Commissioner of Central Excise, where it was held that the assessees are not eligible for such credit on materials like MS steel, angles, and other items used for tower construction. This decision was based on precedents set by the Hon'ble High Court of Bombay in cases involving Bharti Airtel and Vodafone India Ltd. Consequently, the Tribunal found that the appellant is not entitled to claim CENVAT credit on these materials.

2. Moving on to the second issue, the Tribunal considered the eligibility of CENVAT credit on the tax paid for cabs used for official duties of the employees. It was established that the rent-a-cab service was availed by the appellant for their employees to undertake official trips related to their telecommunication services. The Tribunal concluded that such credit is rightfully available to the appellants.

3. In the final decision, the Tribunal partially allowed the appeal concerning the credit on rent-a-cab service but dismissed it regarding tower materials. Furthermore, considering the complexity and various decisions surrounding the disputed points, which led to a reference to a Larger Bench for resolution, the Tribunal found no justifiable reason to impose penalties on the appellant. Consequently, the penalty under section 80 of the Finance Act, 1994, was set aside.

4. Ultimately, the appeal was disposed of with the above determinations, providing clarity on the eligibility of CENVAT credit for specific items and services used in the context of telecommunication tower construction and official duties.