Mr. B.S.V. Murthy

1. During EA 2000, audit report pointed out that the assessee had taken the credit of service tax towards telephone services utilised outside the plant and outside Ankleshwar. The telephone service utilised from the telephone installed outside the factory premises does not pertain to input services under the provisions of Rule 2(1) of Cenvat Credit Rules, 2004 as they are not used by the manufacturer directly or indirectly in or in relation to manufacture of final product. Similarly, it was also observed that the same practice of availing cenvat credit on service tax towards telephone services utilised outside the plant and outside Ankleshwar was also not correct. Accordingly proceedings were initiated to deny and demand cenvat credit of service tax amounting to Rs. 7,95,012/- with interest availed during the period August 2007 to June 2009, which culminated in confirmation of demand with interest and imposition of penalty of equal amount demanded. Heard both the sides. In the show cause notice issued to the appellant, in Para-5, it has been stated that appellant was required by the department to provide details of telephone service utilised outside the factory and outside Ankleshwar and on the basis of statements submitted by the appellant, the liability has been calculated and show cause notice was issued. The ground taken for denying the cenvat credit and demanding the same is that services were utilised outside the factory and outside Ankleshwar. Therefore, the arguments advanced by the learned AR that there is no evidence to show that services were utilised in relation to manufacture or business activities of the appellant and no evidence has been produced by the appellant that services were related to business does not seem to flow from the show cause notice at all. The allegation in the show cause notice was that the services were utilised outside the factory and therefore credit is not admissible. In the case of Excel Crop Care Limited - : 2008 (12) STR 436 (Guj.) Honble High Court has held that credit cannot be disallowed on the ground that the phones were not installed in the factory premises. The view taken in that case was that credit is admissible even for the mobile phones installed out side the factory and utilisation can be out side the factory. Therefore, as submitted, the decision in the case of Excel Crop Care Limited clearly cover the issue before me. In the case of BASP Industries - : 2011 (24) STR 30 (Tri. Mumbai), the Tribunal took the view that credit is admissible in respect of service tax paid on telephone installed at the residence of one of the partners. The Tribunal held that department could not produce any evidence that telephone was not used for business purpose. This decision would show that it is for the department to show that service was not used for business purpose. In this case, neither there is any allegation in the show cause notice that telephone was not used nor there is any evidence put-forth.

2. Under these circumstances, I find that credit availed has been correctly availed and the appeal is allowed with consequential relief to the appellant.

(Dictated and pronounced in the Court)