Custom, Excise & Service Tax Tribunal
M/S. Automag India P. Ltd vs Cce Pune I on 21 September, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
Appeal No. E/723/09 - Mum
(Arising out of Order-in-Appeal No. P-I/VSK/83/2009 dated 24.03.2009 passed by the Commissioner of Central Excise (Appeals), Pune I)
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
M/s. Automag India P. Ltd.
:
Appellants
Versus
CCE Pune I
Respondents
Appearance Shri S.P. Mathew, Advocate for Appellants Shri N.A. Sayyad, JDR for Respondents CORAM:
Shri. Ashok Jindal, Member (Judicial) Date of Hearing : 21.09.10 Date of Decision : 21.09.10 ORDER NO.
Per : Ashok Jindal The appellant had filed this appeal against the impugned order wherein the input service credit on Mobile Phone Service was denied holding that the mobile phones given to the employees as a perquisite as part of the remuneration package is a fringe benefit and cannot be treated as an input service.
2. The facts of the case are that the appellants are engaged in the manufacture of excisable goods and availing input service credit on mobile phones issued to the executives of the Company. A show-cause notice was issue to the appellant on the ground that the input service credit on mobile phones is not admissible to them as they were not used in or in relation to the manufacture of the excisable goods. The adjudicating authority while considering the submission of the appellant has made the following observation:-
Considering the provision of CENVAT Credit Rules, 2004 and the Master Circular No. 97/8/2007-S.T. dated 23.08.2007, I am convinced that the assessee is eligible for availment of CENVAT credit on mobile phones. However, the premises where the service is availed is beyond the registered premises where the manufacturing process is taking place, therefore the use of mobile phones is not coming forth that they have utilised the said service in or in relation to the manufacture of final product. Further also, Shri Mahesh M. Joshi, G.M.Finance of M/s Automag India Pvt. Ltd. during his statement dtd. 30.11.2007 has stated that the mobile phones services were used partially in or in relation to the manufacture of excisable products of the company, however they failed to establish the partial use of input service in or in-relation to the manufacture of final products.
3. Aggrieved from the order of the adjudicating authority, the appellant preferred an appeal before the Commissioner (Appeals), who denied the input service credit to them holding that the mobile phones have been given to the employees as perquisite and is treated as a fringe benefit just like a staff car or a laptop or a housing facility. Therefore, these facilities can be used either for official or for personal purpose and there is no direction in terms of the desired usage. Hence, input service credit was denied. Aggrieved from the Commissioner (Appeals) order, the appellant is before me.
4. The learned Advocate for the appellant submitted that the service is required at each stage of business activity right from the stage of procurement of inputs till receipt of the payment for sale of final product is acceptable subject to confirmation of ownership of mobile phones and who has paid the bills. The adjudicating authority had accepted their contention that they are entitled to avail input service credit on these mobile phones but denied the same on the ground that mobile phones are not registered at the factory premises. On appeal, the Commissioner (Appeals) denied the input service credit on some other premise. He further submitted that the charge in the show-cause notice is that these mobile phones are not used in or in relation to the manufacture of the final product and the same has not been dealt with by the Commissioner (Appeals) as it has already been dealt with by the adjudicating authority in their favour. Hence, the impugned order is liable to be set aside. In support of his submission, he placed reliance on CCE vs Excel Crop Care Ltd. 2008 (12) S.T.R. 436 (Guj.) and ITC Ltd. vs. Commissioner of Customs and Central Excise, Salem - 2009 (20) STT 110 (CESTAT-Chennai) .
5. On the other hand the learned DR submitted that these mobile phones were not used in or in relation to the manufacture of the final product, hence, the lower authorities have rightly denied the input service credit to the appellants. He further submitted that as per Rule 2(l) of the CENVAT Credit Rules, 2004 the appellant is required to use the service in or in relation to the manufacture of the final product failing which the appellant is not entitled for input service credit and in this case the appellant has not shown any connection between the use of the mobile phones and manufacturing of the final products hence, the lower authorities have rightly denied the input service credit.
6. Heard both sides.
7. I have carefully gone through the submissions made by both the sides. In the impugned order, the input service credit is denied holding that the mobile phones have been given to the employees as perquisite and is treated as a fringe benefit just like a staff car or a laptop or a housing facility. Therefore, the items given to the employees as part of the remuneration package is a fringe benefit cannot be treated as an input service. These facilities can be used either for official or for personal purpose and there is no direction in terms of the desired usage and input credit service was denied. On the similar findings, this Tribunal in the case of ITC Ltd. (supra) has held that the assessee is entitled for input service credit on the mobile phone services. I have also gone through the adjudication order wherein the adjudicating authority has also found that considering the provision of CENVAT Credit Rules, 2004 and the Master Circular No. 97/8/2007-S.T. dated 23.08.2007, I am convinced that the assessee is eligible for availment of CENVAT credit on mobile phones and the same allegation against the appellant in the show-cause notice which has held in favour of the appellant. The adjudicating authority has denied the input service credit on the premise that the mobile phones are not registered at the factory premises. Although the adjudicating authority has dealt with the show-cause notice and decided in favour of the appellant but denied input service credit on some other premises and the lower appellate authority has gone beyond the scope of show-cause notice. Hence, the impugned order is not sustainable. As the issue in show-cause notice has been decided by the adjudicating authority and the Revenue has not preferred an appeal against that order, the adjudication order with regard to the admissibility of mobile phones as alleged in show-cause notice has attained finality. Hence, the appellants are entitled for input service credit on mobile phones in the facts and circumstances of the case.
8. In the above terms, the impugned order is set aside and the appeal is allowed.
(Pronounced in Court) (Ashok Jindal) Member (Judicial) nsk 5