2024 (4) TMI 227 - AT - Service Tax

Reversal of CENVAT Credit in terms of Rule 3 (5) of the Cenvat Credit Rules, 2004 - no physical removal of capital goods - HELD THAT - The said issue has been examined by this Tribunal in the case of M/S. VODAFONE MOBILE SERVICES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, AHMEDABAD 2017 (12) TMI 29 - CESTAT AHMEDABAD , wherein this Tribunal has held that appellant has correctly availed Cenvat credit and is not required to reverse Cenvat credit in terms of Rule 3(5) of Cenvat Credit Rules, 2004. As the issue has already been settled by this Tribunal wherein it has been held that the appellant has correctly availed Cenvat credit and is not required to reverse Cenvat credit in terms of Rule 3(5) of Cenvat Credit Rules, 2004, therefore, there are no merit in the impugned order. Appeal allowed.

Summary

Issues:
The case involves the reversal of cenvat credit u/s Rule 3(5) of the Cenvat Credit Rules, 2004 due to the absence of physical removal of capital goods.

Facts of the Case:
The appellant, engaged in providing cellular telephone services, laid out optical fibre cables in Kolkata. Another division of the appellant provided national and international long-distance services, requiring optical fibre network. A Memorandum of Understanding was signed between the appellant and Vodafone South for using the optical fibre. The appellant used optical fibre cables for its customers and raised a debit note to apportion the cost. A Spot Memo and a show-cause notice were issued regarding the reversal of cenvat credit, which was confirmed.

Legal Analysis:
The Tribunal examined the issue of whether physical removal of capital goods is necessary for reversing cenvat credit. Citing judicial pronouncements, the Tribunal emphasized the need for physical removal as per Rule 3(5) of the Cenvat Credit Rules, 2004. Referring to the decision in J.K. Spinning and Weaving Mills Limited Vs. UOI, the Tribunal held that physical movement of goods is essential for removal. The Tribunal also considered the case of Associated Cement Co. Limited and ruled in favor of physical removal to invoke Rule 3(5).

Judgment:
The Tribunal found no justification to demand the reversal of cenvat credit as the goods were not physically removed to the sister unit. Citing precedents and High Court decisions, the Tribunal concluded that the appellant correctly availed cenvat credit and was not required to reverse it. The impugned order was set aside, and the appeal was allowed with consequential relief.

Conclusion:
The Tribunal's decision clarified the requirement of physical removal for reversing cenvat credit under Rule 3(5) of the Cenvat Credit Rules, 2004. The appellant's appeal was successful, and the impugned order was overturned based on the legal analysis and precedents cited during the proceedings.