Case Note & Summary
The case is an appeal filed by the Commissioner of Central Excise, Goa, against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) which allowed cenvat credit to the respondent, Hindustan Coca Cola Beverages Pvt. Ltd., for service tax paid on mobile phones used by its employees. The appellant argued that as per Circular No.59/8/2003-ST dated 20.6.2003, mobile phones are not eligible for cenvat credit, and that the definition of 'input services' under Rule 2(l) of the Cenvat Credit Rules, 2004 does not include mobile phones. The respondent contended that the circular is not applicable under the 2004 Rules and that mobile phones are used in the course of business, thus qualifying as input services. The court, after hearing both sides, dismissed the appeal, holding that the circular dated 20.6.2003 is not applicable under the Cenvat Credit Rules, 2004, and that service tax paid on mobile phones used by employees is eligible for cenvat credit as they are used in the course of business. The substantial questions of law were answered in favor of the respondent.
Headnote
A) Service Tax - Cenvat Credit - Input Services - Mobile Phones - Cenvat Credit Rules, 2004, Rule 2(l) - The issue was whether service tax paid on mobile phones used by employees of a manufacturing company qualifies as 'input service' for cenvat credit. The court held that mobile phones are covered under the definition of input services as they are used in the course of business, and the circular dated 20.6.2003 is not applicable under the 2004 Rules. (Paras 2-3) B) Service Tax - Cenvat Credit - Circular Applicability - Cenvat Credit Rules, 2004 - The court examined whether the Board's Circular No.59/8/2003-ST dated 20.6.2003, which clarified that service tax on mobile phones is not eligible for credit, applies to the 2004 Rules. Held that the circular is not applicable as the 2004 Rules have a different scheme and definition of input services. (Paras 2-3)
Issue of Consideration
Whether service tax paid on mobile phones used by employees/staff of a manufacturing company is eligible for cenvat credit under the Cenvat Credit Rules, 2004, and whether the Board's Circular No.59/8/2003-ST dated 20.6.2003 is applicable under the 2004 Rules.
Final Decision
Appeal dismissed. The substantial questions of law are answered in favor of the respondent. Service tax paid on mobile phones used by employees is eligible for cenvat credit under the Cenvat Credit Rules, 2004.
Law Points
- Cenvat credit eligibility
- input services
- mobile phones
- circular applicability
- Cenvat Credit Rules
- 2004
