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TMI Blog2014 (9) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... er. - In the instant case, the towers and the cabins are used by the appellant as Passive Telecom Infrastructure for providing output service namely 'Business Auxiliary Service' as declared by the appellant to the department in 2005 and agreed to by the department in their reply dt. 20.9.2005. Appellant are entitled for input service credit on towers and cabin, which have been used by the appellant for providing output service under the category of 'Business Auxiliary Service' in the facts of the case. - Decided in favor of assessee. Levy of Interest on reversal of unutilized cenvat credit - Held that:- The case in hand although the appellant has taken the Cenvat Credit, the same has been reversed on pointing out therefore the facts of this case are similar to the case of Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] and distinguishable from the facts of the case of Ind-Swift Laboratories Ltd. (supra), as in the case of Ind-Swift Laboratories Ltd. [2011 (2) TMI 6 - Supreme Court], the Cenvat Credit was taken by the assessee on the strength of fake invoice and credit was not reversed by them but it was recovered by way of demanding duty. Therefore, the said f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larify whether the said activity of Passive Telecom Infrastructure comprising of tower/masts/pole, shelter, battery banks, DG Sets etc. attracts service tax under the category of Business Auxiliary Service. It was informed to the appellant vide letter dt. 20.9.2005 that they are liable to pay service tax under the category of Business Auxiliary Service' on the above said activities. In June 2009 Audit was conducted in the premises of the appellant and certain information were sought from the appellant. Department objected to availment of Cenvat Credit on parts of Towers, BTS Cabins etc., thereafter three show cause notices were issued to the appellant which are as under:- S.No SCN No. date Amount of demand Period of demand Issue involved 1. V/ST/Dn.Bel/IAD/GTL/Infra/2009/775 dated 22.10.2011 Rs.69,19,02,601/- 2006-07 to 2010-11 Wrong availment of Cenvat credit on Towers/parts etc. 2. V/Dn.V/Bel/AD/GTL/Infra/2009 dated 12.10.2012 RS.67,25,973/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of Bharti Airtel Ltd. (supra). The said case has no relevance to the facts of this case. As in the said case, the assessee was a Cellular Phone Service Provider/Telecom Operator and to provide the said service they installed certain towers which become immoveable as per Circular No. 137/315/2007-CX-4 dt. 26.2.2008. In the circular it has been clarified that Cenvat Credit is not available on tower and parts thereof to Cellular Phone Service Provider as held in the case of Bharti Airtel Ltd. (supra). In the case of Bharti Airtel Ltd. this Tribunal proceeded with the case on the facts of appellant being a Cellular Phone Service Provider. Therefore, the said decision has no relevance to the facts of the present case. He further submits that in the case of Hutchison Max Telecom P. Ltd. (supra), the Hon'ble High Court was dealing with the issue whether the activity undertaken by the respondent amounts to manufacture as per Section 2(f) of the Central Excise Act, 1944, and thereafter arrived at as in the said case. The activity undertaken by the respondents in that case did not pass the test of marketability and consequently 'goods' and therefore Cenvat was denied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of Cenvat Credit Rules for availment of Cenvat Credit, as the appellant has contended that they are claiming that Cenvat Credit be allowed on the goods in question as inputs. Therefore, we are not discussing the issue whether the appellants are entitled to Cenvat Credit as capital goods. In these circumstances, we may examine the definition of inputs which has been described under Rule 2(k) of the Cenvat Credit Rules, 2004. (k) input means- (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on the inputs for providing that service is entitled for Cenvat Credit as per Rule 2(k) (ii) of the Cenvat Credit Rules, 2004. Further, we find that the adjudicating authority has heavily relied upon the decision of Bharti Airtel Ltd. (supra); in the said case the facts are totally different to the facts of the case in hand. In fact in that case appellant was engaged in providing cellular telephone service and as per Board Circular No. 137/315/2007 CX-4 dt. 26.2.2008, it is clarified that no Cenvat Credit on towers and BTS cabin is permissible for Cellular Phone Service Provider. In the instant case, the towers and the cabins are used by the appellant as Passive Telecom Infrastructure for providing output service namely 'Business Auxiliary Service' as declared by the appellant to the department in 2005 and agreed to by the department in their reply dt. 20.9.2005. 9. We further find that in this case the intention of the appellant and their client (Operators) is to confer the Operators a right to install active infra network equipment including GSM Antenna and BTS equipment, and to extend and receive, highly specialized technical service, which includes the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 2004 held as under:- 2. A bare reading of the said Rule would indicate that the manufacturer or the provider of the output service becomes liable to pay interest alongwith the duty where CENVAT credit has been taken or utilized wrongly or has been erroneously refunded and that in the case of the aforesaid nature the provision of Section 11AB would apply for effecting such recovery. 3. We have very carefully read the impugned Judgment and order of the High Court. The High Court proceeded by reading it down to mean that where CENVAT credit has been taken and utilized wrongly, interest should be payable from the date the CENVAT credit has been utilized wrongly for according to the High Court interest cannot be claimed simply for the reason that the CENVAT credit has been wrongly taken as such availment by itself does not create any liability of payment of excise duty. Therefore, High Court on a conjoint reading of Section 11AB of the Act and Rules 3 4 of the Credit Rules proceeded to hold that interest cannot be claimed from the date of wrong availment of CENVAT credit and that the interest would be payable from the date CENVAT credit is wrongfully util ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ND so as to give relief to the assessee is found to be erroneous. In that regard the submission of the counsel for the appellant is well founded that once the said credit is taken the beneficiary is at liberty to utilize the same, immediately thereafter, subject to the Credit Rules. 17. As is clear from the aforesaid judgments, the Apex Court in the case of UNION OF INDIA Vs. M/s. IND-SWIFT LABORATORIES LTD., was essentially concerned with the interpretation placed by the Punjab and Haryana High Court where it had held that Rule 14 of the Cenvat Credit Rules, 2004 had to be read down to mean that where Cenvat credit has been taken or utilized wrongly interest should be payable on the Cenvat credit from the date the said credit had been utilized wrongly and that interest cannot be claimed simply for the reason that Cenvat credit has been wrongly taken as such availment by itself does not create any liability of payment of excise duty. Further they held that the word 'OR' appearing in Rule 14 twice could be read as 'AND' by way of reading it down. Disagreeing with the said reasoning, the Apex Court held that Rule 14 specifically provides that where Cenvat has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AB. Therefore the Apex Court interfered with the judgment of the Punjab and Haryana High Court and rightly rejected by the Settlement Commission as outside the scope and they found fault with the interpretation placed on Rule 14. 19. Rule 14 of the CENVAT Credit Rules, 2004 reads as under: Rule 14. Recovery of CENVAT credit wrongly taken or erroneously refunded. Where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the some along with interest shall be recovered from the manufacture or the provider of the output service and the provisions of sections 11A and 11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries. A reading of the aforesaid provisions makes it very clear that the said provision is attracted where the Cenvat Credit has been taken or utilized wrongly or has been erroneously refunded. In view of the aforesaid judgment of the Apex Court, the question of reading the word 'and' in place of 'or' would not arise. It is also to be noticed that in the aforesaid Rule, the word 'avail' is not used. The words used are 'taken' or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mediately reversed the entry. Thus the assessee did not take the benefit of the wrong entry in the account books. As he had taken credit in a sum of ₹ 11,691-00, a sum of ₹ 154-00 was the interest payable from the date the duty was payable, which they promptly paid. The claim of the Revenue was, though the assessee has not taken or utilized this Cenvat credit, because they admitted the mistake, the assessee is liable to pay interest from the date the entry was made in the register showing the availment of credit. According to the Revenue, once tax is paid on input or input service or service rendered and a corresponding entry is made in the account books of the assessee, it amounts to taking the benefit of Cenvat credit. Therefore interest is payable from the date, though, in fact by such entry the Revenue is not put to any loss at all. When once the wrong entry was pointed out, being convinced, the assessee has promptly reversed the entry. In other words, he did not take the advantage of wrong entry. He did not take the Cenvat credit or utilized the Cenvat Credit. It is in those circumstances the Tribunal was justified in holding that when the assessee has not taken th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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