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Service Tax
1. CENVAT credit:
Whether CENVAT credit is available for air travel for
business?
i) CCE, Ahmedabad vs. Fine Care Biosystems 2009 (16) STR 701
(Tri.-Ahmd.)
Commissioner (Appeals) allowed CENVAT credit of service tax
on outward freight and commission on air tickets. It was held that availability
of CENVAT credit on outward freight is till the place of removal that is the
port from which the goods are loaded for export made on FOB was pronounced in
ABB Ltd vs. Commissioner 2009 (15) S.T.R. 23 (Tribunal-LB) and for CENVAT on air
tickets, it was held that the definition of input service was wide enough to
cover all services used directly or indirectly in the manufacture process, the
CENVAT was admissible. Further, the revenue did not submit any proof that the
travel was for other than business purpose.
Whether credit on mobile
phones is available as they are not installed in the factory premises?
ii) CCE & CUS, Nagpur vs. Ultratech Cement Ltd. 2009 (16) STR 611 (Tri.-Mum)
The company availed CENVAT on the mobile phones provided to
the employees. The adjudicating authority allowed the CENVAT and dropped the
demand. The appeal filed by the Department was also dismissed on merits. Then
the appeal was made to the Tribunal with the contention that mobile phone
service is not cenvatable, as the telephone is not installed in the factory
premises. The Department also referred to the pending appeal filed with the
Bombay High Court (Nagpur Bench) against the Tribunal Order No. S/263-264/C-IV/SMB/07
dated 01-06-2007 (in the case of Manikgrah Cement).
However, the company citied various decisions holding that
CENVAT on mobile services was available. The list interalia included:
(a) CCE, Chennai vs. Showa Engineering Ltd & Another 2009
(14) S.T.R. 840 (Tri)
(b) ITC Ld vs. Commissioner of Customs & Cen tral Excise,
Salem 2009 (14) S.T.R. 847 (Tri) = 2009-TIOL-439-CESTAT-MAD
(c) Finolex Cables vs. Commissioner of Central Excise, Mumbai
;I, 2009 (14) S.T.R. 303 (Tri-Mumbai)
(d) Commissioner of Central Excise vs. Excel Corp Care Ltd.
2008 (12) STR 436 (Guj)
(e) Commissioner of Central Excise (LTU), Chennai vs. Brakes
India Ltd., 2009 (13) S.T.R. 684 (Tri-Chennai)
Citing the Gujarat High Court in case of Commissioner vs.
Excel Corp Care (supra), it was held that CENVAT on mobile phones was allowable
and it was observed that the onus to prove that they were directly or indirectly
used in connection with business activity is on the manufacturer.
Is CENVAT credit available
on colony security service, transport for employees and guest house maintenance?
iii) CCE vs Hindustan Zinc Ltd. 2009 (16) STR 704 (Tri.-Bang)
The company was not allowed input credit for colony security
service, transport service for employees and guest house maintenance service.
It was held that for a company, it was the duty to provide
accommodation to the employees and the colony being the property of the company,
it was obligatory for them to provide security also. Hence it was input service,
the definition under 2(1) of CCR being wide to cover such services. In case of
transportation of employees, it was observed that the services were in relation
to the manufacturing of excisable goods and hence it was also an eligible input
service. Similarly, in the case of maintenance of guest house, it was utilized
for the stay of businessmen during their business visit and hence was in
relation to the business activities was considered eligible input service.
Reliance was placed inter alia on:
(i)
Manikgrah Cement vs. Commissioner of C. Ex. & Customs, Nagpur (2008) 9 S.T.R.
554 (Tri-Mum) and
(ii) Commissioner of C. Ex., Nashik vs. Cable Corporation of
India Ltd. (2008) 12 S.T.R. 598 (Tri-Mum)
Whether CENVAT credit on specified services mentioned in Rule
6(3) on capital goods are limited to 20%?
iv) Idea Cellular Ltd. vs. CCE, Ahmedabad 2009 (16) STR 712 (Tri.-Del)
The appellant is engaged in providing cellular mobile service
to their Clients and while rendering this service, they rendered services of
interconnectivity and permitted use of infrastructure to other telephone
services. The revenue contended these were not actually rendering such services
but it was cost sharing and the same was not defined under section 65(115) and
hence they were exempted services. The Tribunal observed that the services were
subsumed in the services rendered by the appellant to the client and hence they
were not exempt services.
Further according to revenue, the 17 specific services and
the CENVAT on capital goods is also restricted to 20%. It was held that the
Board Circular No. 137/203/2007-CX-4 dated 01-10-07 clearly stated that the rule
does not restrict either the specified services or the credit on the capital
goods and the Departmental Circular is binding, unless a contrary decision is
pronounced either by the High Court or the Honorable Supreme Court.
