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July 2015

2015] 57 taxmann.com 72 (Bom H C) – Commissioner of Central Excise, Goa vs. Hindustan Coca Cola Beverages (P) Ltd.

By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 2 mins
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CENVAT – Definition of “input service” post 01- 04-2011 – Service tax paid on mobile phones which are used by employees/staff of manufacturer are eligible as input service credit.

Facts:
The Assessee availed CENVAT credit of service tax paid on mobile phones used by its employees/ staff. Department relied upon CENVAT credit circular dated 20th June 2003 and denied the credit. Assessee argued that input services were not defined in Service Tax Credit Rules, 2002 and so circular not applicable under CENVAT Credit Rules, 2004.

Held:
The High Court held that ‘saving’ provision as per Rule 16 of CENVAT Credit Rules, 2004 provides that circulars prior to these rules shall be applicable only if they are consistent with it. Since, “input services” was not defined in Service Tax Credit Rules, 2002; it cannot be said that there is any corresponding Rule in Rules of 2004 which can be said to have been saved. The High Court further held that, as per definition of “Input Services” in Rule 2(l) of CCR, any expenditure incurred in manufacturing activity would be entitled for credit facility. It is undisputed that mobile phones are in connection with manufacturing process of the respondent. Thus CENVAT credit would be allowed thereby rejecting the appeal.

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