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TMI Blog2009 (2) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... n to a telephone connection , as defined under section 65(105)(b) of the Finance Act, 1994. The appellant have set up Base Trans receiver Station Towers (BTS Towers) at various locations in the circle which emit and receive wireless signals to and fro between a person availing cellular mobile telephone service through his SIM card which is installed in the handset. As soon as the person dials a particular number, the same is transmitted to such towers. From there the number gets transmitted to Base Station Controller (BSC) and from there it is transferred to Main Switching Centre (MSC) of the company. If the appellant's subscriber dials the number of another telephone service provider, the MSC instrument of the appellant through wireless signals requests the MSC of that telephone service provider to connect to his subscriber. The appellant have taken credit of Central Excise duty Addl. customs duty paid on various capital goods including those mentioned above and also the credit of service tax paid on various input services used for providing the output services. The revenue by invoking rule 6(3)(c) of the Cenvat Credit Rules, 2004 has restricted the utilization of Cenvat credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he telephone services being provided by those telephone service provider to their respective clients, as in respect of calls originating in network of other service providers and terminating in the appellant's network, it is the telephone service providers from whose network the calls originate who charge full amount from their respective clients for those calls and pay service tax on the same and thereafter the call charges collected by them are shared with the appellants as per the formula prescribed by the TRAI. Thus the inter-connectivity charges being received by the appellant from other telephone service providers are nothing but their share of the call charges collected by other service providers in respect of the calls originated from their network and terminated in the appellant's network. (3) Even if the inter-connectivity and infrastructure use services are treated as 'exempted services', as defined under rule 2(e) of the Cenvat Credit Rules, 2004, as per the provisions of rule 6(4), capital goods Cenvat credit is available, as the capital goods are not used by the appellant exclusively for providing exempted service and as per the provisions of rule 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent ceiling is applied in this manner, it will be found that the appellant's input duty credit/input service tax credit utilization for payment of service tax on the output service has overshot the ceiling only on a few occasions by small amounting. As per Tribunal's judgment in case of A.C. Nielsen Org. Marg (P.) Ltd. v. CCE [2006] 5 STT 281 (New Delhi - CESTAT), assessment stipulated in rule 7(4) of Service Tax Rules, 1994 is half yearly and not monthly and therefore excess tax paid in one month can be adjusted against short payment in other month within the same half year period. (5) Since there was dispute as to whether inter-connectivity service provided by one telephone service provider to another is taxable or not under heading Service provided by Telegraph authority to its clients in relation to telephone connection and since this issue was finally settled vide Board's letter No. 149/2/04-CX-4, dated 13-6-2004 to BSNL, the appellant cannot be accused of suppressing from the Department the fact that they are providing some services like inter-connectivity which are not taxable. Therefore only normal limitation period for demand of allegedly wrongl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther companies designated as 'Telegraph authority' for providing landline or mobile telephone services, each having separate net work and since a subscriber of a telephone service provider should be able to not only make telephone call to any person including persons who are the subscribers of other telephone service providers, but also receive the telephone calls originating from anywhere including the network of other telephone service providers, all the telephone service providers, whether landline or mobile, have to have inter-connection with each other and they bill each other for the inter-connectivity i.e., providing access to their network to the calls originating from network of other telephone services providers - the telephone service provider from whose network the call originates, collects the full charges for the call from its subscriber, and pays the service tax on that amount, and if the call has terminated in the network of some other service provider, the call charges are shared with that service provider as per a formula prescribed by TRAI. The charges for such inter-connectivity are called ICU charges/Mobile terminating charges. Tap out charges are the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twork access i.e., inter-connecting, being provided by the appellant to other telephone service providers, is a service quite distinct from the telephone service being provided by those telephone service providers to their respective subscribers. 3.2 In view of the above, we hold that during the period of dispute, the appellant were providing certain - exempted services in addition to the non-exempt taxable telephone service and, therefore, the provisions of rule 6(3)(c) would get attracted. 4. Second plea of the appellants is that even if the provisions of rule 6(3)(c) are attracted, the limit of '20 per cent of the service tax payable' on utilization of tax credit for payment of service tax on telephone service is not applicable in respect of capital goods Cenvat credit and service tax credit in respect of 17 input services specified in rule 6(5). We agree with this plea of the appellant as (a) In terms of the provisions of sub-rule (4) of rule 6 of the Cenvat Credit Rules, 2004, capital goods Cenvat credit is not permissible only when the capital goods are exclusively used for manufacture of 'exempted goods' or for providing 'exempted service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to all input services and there would not have been any reason to select these 17 services for placing them under sub-rule (5). They have been placed in a separate sub-rule [i.e., sub-rule (5)] because in respect of utilization of credit of tax paid on these services, the restriction of 20 per cent does not apply, while restriction applies in all other cases.... 4.1-1 From the above circular of the Board there is no doubt that the intention of the Government is not to restrict the utilization of the credit of 17 services specified in sub-rule (5) of rule 6 to the 20 per cent limit specified in rule 6(3)(c) and this will apply with equal force to capital goods Cenvat credit for which a similar provision has been made in sub-rule (4) of rule 6 and which are also part of fixed assets that cannot be apportioned for maintaining separate records. As per Hon'ble Supreme Court's judgment in case of CCE v. Ratan Melting Wire Industries [2008] 231 ELT 22/17 STT 103, the Board's instructions are binding on the Departmental officers unless contrary view has been expressed by Hon'ble Supreme Court or any High Court. In this case neither any such judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een placed on Tribunal's judgment in case of Vijayanand Roadlines Ltd. v. CCE [2008] 15 STT 417 (Bang. - CESTAT), wherein the Tribunal with reference to rule 3(5) of the Service Tax Credit Rules, 2002, which is pari materia with rule 6(3)(c) of the Cenvat Credit Rules, 2004, has held that the utilization is not restricted to monthly or quarterly basis and that it can be utilized at any time. We agree with this plea. In the case of Vijayanand Roadlines Ltd. (supra) the appellant during June, 2003 to December, 2003 period, as against service tax credit utilization quota of 35 per cent of the total service tax payable, had paid entire service tax through PLA and they utilized the unutilized quota of payment through duty credit for January, 2003 - December, 2003 period, during January, 2004 - March, 2004 period and the Tribunal held that there is no time frame fixed in rule 3(5) of the Service tax Credit Rules, 2002 for utilization of the credit to the extent of 35 per cent of the tax liability. Applying the ratio of the Tribunal's judgment in Vijayanand Roadlines Ltd. s case (supra) to this case, if during certain months, the credit utilization for payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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