28 July 2010
2009 -TMI - 33960 - CESTAT, CHENNAI Other Citation: 2009 (14) S.T.R. 847 (Tri.-Chennai)
ITC LTD. Versus COMMR. OF CUS. & C. EX., SALEM Service Tax - 2009 - TMI - 33960 - Tri Cenvat Credit on telephone services – mobile phones and landline phones installed by company at residence of executives - In the Excel Crop Care Ltd. case, the Hon’ble High Court of Rajasthan held that service tax paid for use of mobile phones was available to the assessee paying the mobile phone bill. Their Lordships held that “the ground on which the credit was disallowed namely, the phones were not installed in the factory premises, cannot be termed to be a ground germane to the provisions of the rules relevant for the purpose. In the Indian Rayon and Industries Ltd. case, the Tribunal had held that service tax paid on mobile phones was available as credit to eligible service providers of output service and manufacturers. Excel Crop Care case, Grasim Industries case, Keltech Energies Ltd. case and the Brakes India Ltd. case had followed the ratio of the Tribunal’s decision in the Indian Rayon & Industries Ltd. case. – Credit allowed. FULL TEXT OF CASE
Appeal No. - S/192/2006 Order / Judgment No. - 120/2009 Dated - January 27, 2009
Shri P. Karthikeyan, Member (T) Shri V. Panchanathan, Advocate, for the Appellant. Shri M.K.A.K. Mohiddin, JDR, for the Respondent. [Order].- M/s. ITC Ltd. availed credit of service tax paid in respect of mobile phones and telephones installed at the residential premises of its executives during the period Jan.-Sept.'05. The CBEC, in its Circular No. 59/08/2003-S.T., dated 20-6-2003 had clarified, inter alia, that credit of service tax would be allowed only on telephone sets installed in the business premises and that CENVAT credit was not admissible in respect of service tax paid for the use of mobile phones. Adjudicating a Show Cause Notice, alleging that M/s. ITC had contravened the provisions of Rules 3 and 4 of CENVAT Credit Rules, 2004 (CCR) by availing credit of service tax paid on phones not installed in the business premises, the original authority demanded an amount of Rs.17,196/- and applicable interest under Rule 14 of CCR and imposed penalty of Rs. 5,000/- under Rule 15(3) of CCR. In the impugned order, the Commissioner (A) affirmed the order of the original authority except the penalty imposed. He found that the telephone service involved in the use of mobile phones by the executives of the appellant and telephones installed at the residences of such executives was not input service used in or in relation to the manufacture of excisable goods in the factory of the appellants. Even though such phones could have been utilised to facilitate the business of the appellant, they were more in the nature of perquisites allowed by the management of the appellant-company. He rejected the argument of the appellants that the circular relied on by the original authority had been issued during the currency of CCR, 2002 which were superceded by CCR, 2004. 2. Arguing the case of the appellants, the learned counsel relies on the following case law:- (i) Commissioner of Central Excise v. Excel Crop Care Ltd., reported in 2008 (12) S.T.R 436 (Guj.). (ii) Excel Crop Care Ltd. v. Commissioner of Central Excise, Ahmedabad reported in 2007 (7) S.T.R. 451 (Tri.-Ahmd.). (iii) Grasim Industries v. Commissioner of Central Excise, Jaipur-II reported in 2008 (11) S.T.R. 168 (Tri.-Del.). (iv) Keltech Energies Ltd. v Commissioner of Central Excise, Mangalore reported in 2008 (10) S.T.R. 280 (Tri.-Bang.). (v) Commissioner of Central Excise (LTU), Chennai v. Brakes India Ltd., reported in 2009 (13) S.T.R. 684 (Tri.- Chennai) = 2009 (89) RLT 876 (CESTAT-Chen.). (vi) Indian Rayon & Industries Ltd. v. Commissioner of Central-Excise, Bhavnagar reported in 2006 (4) S.T.R. 79 (Tri.-Mumbai). It is submitted that the above judicial authorities approved availment of service tax paid for the use of mobile phones and landline phones installed by a company for business purpose at the residences of the executives of the assessees. The learned JDR reiterates the findings contained in the impugned order. 3. I have carefully considered the facts of the case and the submissions made by the parties. In the Excel Crop Care Ltd. case (supra), the Hon'ble High Court of Rajasthan held that service tax paid for use of mobile phones was available to the assessee paying the mobile phone bill. Their Lordships held that "the ground on which the credit was disallowed namely, the phones were not installed in the factory premises, cannot be termed to be a ground germane to the provisions of the rules relevant for the purpose. In the Indian Rayon and Industries Ltd. case (supra), the Tribunal had held that in the absence of any express prohibition under the CCR, it was of the view that service tax paid on mobile phones was available as credit to eligible service providers of output service and manufacturers. Excel Crop Care case, Grasim Industries case, Keltech Energies Ltd. case and the Brakes India Ltd. case (supra) had followed the ratio of the Tribunal's decision in the Indian Rayon & Industries Ltd. case. The ratio of these decisions is to the effect that credit of service tax paid for telephone services availed through the staff of the assessees using mobile phones or landline phones at their residences is admissible as input service credit. In the circumstances, I find the impugned order inconsistent with the legal provisions and vacate the same. The appeal is allowed. (pronounced in open court)
28 July 2010
credit of service tax paid for telephone services availed through the staff of the assessees using mobile phones or landline phones at their residences is admissible as input service credit
28 July 2010
does we take credit of service tax on marine cargo insurance ( insurance during transportation from Factory to buyer address)for payment of excise duty.
If the goods lost during transportaion it seller would be liable for the same.
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