Custom, Excise & Service Tax Tribunal
Vodafone Essar Mobile Services Ltd vs C.S.T., New Delhi on 16 June, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.K.Puram, New Delhi COURT-III Date of hearing/decision:16.6.2016 Service Tax Appeal No.56237 of 2013 and Misc. Application No.50536 of 2015 Arising out of the order-in-original No.21-24/SA/CCE/ST/2012 dated 29.11.2012 passed by the Commissioner , Central Excise, Delhi III. For approval and signature: Honble Mr. S.K. Mohanty, Judicial Member Honble Mr. R.K. Singh, Technical Member 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? Vodafone Essar Mobile Services Ltd. .. Appellant Vs. C.S.T., New Delhi . Respondent Appearance: Present Shri Manish Gaur, Advocate for the appellant Present Shri Amresh Jain, A.R for the Respondent/Revenue Coram: Honble Mr. S.K. Mohanty, Judicial Member Honble Mr. R.K. Singh, Technical Member Final Order No. 52477/2016 Per R.K. Singh: This appeal has been filed against the Order-in-Original dated 29.11.2012, in terms of which the following order was passed: ORDER
(a) I hold that the subject items are neither capital goods under Rule 2(a) nor inputs under Rule 2(k) of the CENVAT Credit Rules, 2004 and hence CENVAT credit of the duty paid thereon is not admissible to the appellant for the relevant period.
(b) I order for recovery of CENVAT credit amounting to Rs.5,56,16,995/- under Rule 14 of Cenvat Credit Rules, 2004 read with Section 73 of the Finance Act, 1994.
(c ) I order for recovery of interest on the amount confirmed at (b) above under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 75 of the Finance Act, 1994;
(d) I impose a penalty of Rs.5,56,16,995/- under the provisions of Rule 15(1) of Cenvat Credit Rules, 2004.
2.(a) Ld. Advocate for the appellant gave the break-up of the impugned demand of Rs.5,56,16,995/- as under:
Capital Goods/Inputs: Rs.4,37,26,268/- [Rs.1,97,54,125/- is
Input Services : Rs.1,13,90,730/- beyond normal period
Cenvat Credit taken of 1 year]
on debit notes : Rs. 2,92,604/-
Cenvat allegedly
Credit taken twice : Rs. 2,07,393/-
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Rs.5,56,16,995/-
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(b) As regards the issue of cenvat credit of the capital goods/inputs , the ld. Advocate for the appellant fairly conceded that the same has been decided against the assessee vide CESTAT Larger Bench Interim Order No. IO/ST/41/2016 dated 3.3.2016 in the case of Idea Mobile Communications Ltd. vs. C.S.T. He however pleaded that even in the order leading to difference of opinion referred to Larger Bench which passed the above orders. Both the Members agreed that extended period was not invocable in this case.
( c) As regards the input service credit amounting to Rs.1,13,90,730/-, ld. Advocate referred to the judgments in the case of Oberoi Mall Ltd. vs. CST, Mumbai II 2016 TIOL 704 CESTAT MUM and Vamona Developers Pvt. Ltd. vs. C.C.E. & ST, Pune III 2015 VIL 697 CESTAT MUM ST. to contend that such credit was admissible.
(d) As regards the Cenvat credit taken on debit notes amounting to Rs.,292,604/-, he stated that debit note contained the essential particulars required for taking input service credit and therefore, the cenvat credit taken on debit note should be allowed.
(e) As regards the component of cenvat credit, of Rs.2,07,393/- denied on the ground of having been taken twice, he admitted that as per chart on Page 458 459 of the appeal papers, the said credit appears to have been taken twice though he said the two entries related to different documents.
3. Ld. A.R. for Revenue on the other hand contended that the impugned input services were used for creating immovable property and therefore, credit on such input services cannot be allowed as they were not used for the purpose of providing output service.
4. We have considered the contentions of both sides. At the very outset, Both sides have admitted that cenvat credit in relation to capital goods/inputs amounting to Rs.4,37,26,268/- is not admissible as per the Larger Bench decision in the case of Idea Mobile Communication (supra),. However, as has been stated in the CESTAT DB order which led to difference of opinion on which the Larger bench of CESTAT passed the above orders that extended period is not invocable in this case. Consequently, the cenvat credit on capital goods/inputs pertaining to normal period only is recoverable.
5. As regards the input service credit amounting to Rs.1,13,90,730/- we find that the definitions of input and input service given in Rule 2(k) and (l) of Cenvat Credit Rules,2004 are significantly different from each other. Therefore, the ratio of Bombay High Court judgment in the case of Bharati Airtel vs. C.C.E. 2014 TIOL 1452 HC Mum is not really applicable with regard to input service credit. Indeed, this issue is covered in favour of assessee by CESTAT judgments in the cases of Oberoi Mall ltd. (supra) and Vamona Devleopers (supra). Para 7 & 8 of the CESTAT judgment in the case of Vamona Developers (supra) are reproduced below:
7. It is obvious from the definition of input service as it stood prior to 11.4.201 and after 1.4.2011 that, in the earlier period there was no restriction on use of the input service for construction of building or civil structure used for providing output service. Reliance on the case of Bharti Airtel Ltd. (supra) is misplaced. First , the Honble High Court clearly held that their conclusion is based on the facts and circumstances which fell for their consideration in those appeals. Secondly, because in that case the input services/inputs were used in construction of towers which were held to be immovable property and hence not excisable. And credit was sought on structural items such as iron and steel. Similarly even the judgment in case of Vodafone does not help the Revenue. In the present case, we find that almost the entire creit has been availed on input service which have been used for providing the output service that is Renting of Immovable Property Service for which there was no restriction under the clause (i) of the definition of input service. The inclusive part of the definition of input service allowed services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service etc. The words setting up were deleted only from 1.4.2011.Therefore, the appellant are eligible for the credit in terms of the definition of input service.
8. In view of the above, the credit is held to be admissible and recovery of the same is set aside. Accordingly, interest and penalty are also set aside.
Thus following the above precedents, we hold that the impugned cenvat credit on input services is admissible.
6. As regards the cenvat credit of Rs.2,92,604/- taken on debit note , we find force in the pleading of ld. Advocate that the debit note contained the essential particulars required for taking cenvat credit. Substantive benefit should not be denied in such a situation. This credit is therefore held to be admissible.
7. Coming to the last component of demand amounting to Rs.,207,393/- confirmed on the ground that cenvat credit of this amount has been taken twice, we find that as per chart at pages 458-459 of the appeal papers, it is clear that this credit has indeed been taken twice on the basis of same document. Ld. Advocates contention that the documents were really different is devoid of sustainable merit in the wake of clear entries in the chart on P-458 459 of appeal papers. Therefore this amount is held to be inadmissible and recoverable.
8. In the light of the foregoing, we pass the following order:
(a) We hold that -
(i) cenvat credit relating to capital goods/inputs is not admissible.
ii) extended period is not invocable.
iii) Cenvat credit relating to input service is admissible.
iv) Cenvat credit amount of Rs.2,92,604/- taken on the basis of debit note is admissible.
v) Cenvat credit of Rs.2,07,393/- demanded on account of having been taken twice is inadmissible and recoverable.
(b) Therefore, in view of the above findings/conclusions, the case is remitted to the primary adjudicating authority for de novo adjudication to compute the inadmissible cenvat credit and to confirm the cenvat credit demand and also to re-determine the penalty after giving the appellant an opportunity of being heard.
(S.K. Mohanty) Judicial Member (R.K. Singh) Technical Member scd/ 1