Custom, Excise & Service Tax Tribunal
Commissioner Of Service Tax, Ahmedabad vs M/S Bharati Tele Ventures Ltd on 8 February, 2018
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
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Appeal No : ST/78/2008-DB
ST/CO/37/2008
(Arising out of Order-in-Original No. STC/02/Commr/AHD/2008 dated 10.03.2008 passed by Commissioner of Central Excise & Service Tax, Ahmedabad)
Commissioner of Service Tax, Ahmedabad : Appellant (s)
Versus
M/s Bharati Tele Ventures Ltd. : Respondent (s)
Represented by:
For Appellant (s) : Shri J. Nagori, Authorised Representative For Respondent (s): Shri Jigar Shah, Advocate CORAM:
Dr. D. M. Misra, Honble Member (Judicial) Mr. Raju, Honble Member (Technical) Date of Hearing/Decision : 08.02.2018 Order No. A/10305/2018 Per: Dr. D. M. Misra Heard both sides.
2. This is an appeal filed by the Revenue against Order-in-Original No. STC/02/Commr/AHD/2008 dated 10.03.2008 passed by Commissioner of Central Excise & Service Tax, Ahmedabad.
3. Briefly stated facts of the case are that the respondent are engaged in providing Telecommunication services, which is taxable under the provisions of Finance Act, 1994. In providing the said services, the appellant have availed CENVAT Credit on Tower and Tower materials falling under Chapter 73 of the Central Excise Tariff Act, 1985 as inputs, Alleging that the credit availed on such towers and tower materials cannot be considered as capital goods as defined under Rule 2(a) of the CENVAT Credit Rules, 2004 or as inputs, a show-cause notice was issued for recovery of total credit of Rs.9,19,33,880/- availed during the period October, 2005 to March, 2006. On adjudication, the learned Commissioner dropped the major portion of the demand of Rs.7,56,30,380/-, considering the same as capital goods and confirmed the demand of Rs.1,63,03,500/- with interest and also imposed penalty of Rs.1000/- under Rule 15(3) of CENVAT Credit Rules, 2004. Aggrieved by the said order, both Revenue as well as the assessee filed appeals before this forum.
4. Learned AR Shri J. Nagori for the Revenue submits that in the impugned order learned Commissioner though observed that towers and tower materials are eligible to credit as capital goods, however, he failed to consider that the appellant had availed the entire credit in the same financial year, whereas as per Rule 4(2)(a) of the CENVAT Credit Rules, 2004 the assessee are eligible to avail credit of duty paid on capital goods only to the extent of 50% of the duty paid in the financial year the capital goods were receivedand the balance 50% of the credit in subsequent financial year. It is his contention that on the excess credit availed by the respondent is required to pay interest as they have taken it in advance in the same financial year. Further, he has submitted that the learned Commissioner has erred in confirming the penalty under Rule 15(3) of CENVAT Credit Rules, 2004, which could have been imposed under Rule 15(1) of the CENVAT Credit Rules, 2004.
5. Learned Advocate Shri Jigar Shah for the respondent submitted that the appeal filed by the assessee has been remanded by this Tribunal. Regarding the plea taken by the Revenue, in the present appeal, the learned Advocate submitted that since there is no allegation in the show-cause notice that the interest is recoverable, therefore, such plea at this stage should not be entertained. On the issue of penalty, he submits that the penalty itself is not imposable in view of the judgment of the Hon'ble Gujarat High Court in the case of Asstt. Commissioner of Central Goods & Service Tax, Division-VIII (Vejalpur) Vs. Vodafone Essar Gujarat Ltd. 2017-TIOL-2107-HC-AHM-ST.
6. Heard both sides and perused the records.
7. We find that the learned Commissioner in the impugned order though upheld the admissibility of credit of Rs. 7,56,30,380/- on Towers & Tower materials as capital goods, but failed to make any observation that this credit should have been spread over in two financial years and accordingly, the appellant since availed the total credit in the first financial year itself the total credit, liable to pay the interest on the 50% of the credit availed in advance, which ought to have taken in next financial year. We find force in the contention of the learned AR for the Revenue that the demand notice was issued considering the credit availed on capital goods, therefore, the ground taken by the Revenue is not beyond the purview of show-cause notice. Thus, analyzing the facts and circumstances of the case, we are of the view that the respondents are liable to pay interest for taking the credit of 50% of credit in advance on the capital goods allowed by the learned Commissioner. Accordingly, to ascertain the quantum of interest the matter is remanded to the learned Commissioner.
8. As far as penalty is concerned, we are of the view that Hon'ble High Court has already held in Vodafone Essar Gujarat Ltd. (supra) that no penalty is imposable under Rule 15(1) of the CENVAT Credit Rules, 2004, therefore, we do not find any merit in the plea of the Revenue. Accordingly, the matter is remanded only for the limited purpose of ascertaining the amount of interest.
9. Revenues appeal is disposed of in the above terms and cross-objection filed by the respondent also stand disposed of.
(Dictated and pronounced in the Court)
(Raju) (D. M. Misra)
Member (Technical) Member (Judicial)
Sinha
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Appeal No. ST/78/08