2009 (10) TMI 405 - AT - Service Tax

Cenvat Credit of service tax on mobile phones- Input service-C.B.E. Circular No. 97/8/2007-ST. dated 23.08.2007- in the light of the Circular dated 23.08.2007 and decision of High Court AMBUJA CEMENTS LTD. Versus UNION OF INDIA 2009 -TMI - 32932 - PUNJAB & HARYANA HIGH COURT held that- impugned order not examining whether burden of proof discharged by respondent thus the remanded to the Commissioner(Appeals) for fresh decision.

Summary

Issues:
1. Grant of CENVAT credit on mobile phone service
2. Application of Section 80 of the Finance Act, 1994
3. Burden of proof for claiming CENVAT credit on mobile phone service

Analysis:
1. The lower appellate authority granted CENVAT credit on mobile phone service to the assessee based on previous Tribunal decisions. However, the Revenue challenged this decision, arguing that the order lacked requisite findings. The Revenue also questioned the application of Section 80 of the Finance Act, 1994, for setting aside the penalty imposed on the assessee. The Tribunal noted that the impugned order did not provide reasons for allowing the credit, leading to the decision to remand the case to the lower appellate authority for further examination.

2. The learned counsel presented a Board's Circular clarifying that CENVAT credit on Service tax paid for mobile phone service was admissible if the phone was used for providing output service or in the manufacture of finished goods. The burden of proof was placed on the claimant of the credit. This circular was upheld by the Punjab & Haryana High Court in a relevant case. The lower appellate authority failed to assess whether the assessee had met the burden of proof regarding the mobile phone service during the disputed period. Consequently, the Tribunal set aside the impugned order and directed a fresh decision by the lower appellate authority, emphasizing consideration of the Board's circular and the High Court judgment.

3. In conclusion, the Tribunal allowed the appeal by way of remand, instructing the lower appellate authority to reevaluate the issue in compliance with the law and principles of natural justice. The lower appellate authority was specifically directed to consider the Board's circular and the High Court judgment while making a fresh decision. This comprehensive analysis highlights the significance of proper justification and burden of proof in claiming CENVAT credit on mobile phone service, ensuring adherence to legal standards and precedents.