Whether the assessee is eligible to take cenvat credit of service tax paid on Commission agent and telephone services in respect of the telephone installed at the residence of Managing Director or not?

PJ/CASE LAW/2016-17/3058

Case:- VISHAL PIPES LTD. Vs COMMISSIONER OF CENTRAL EXCISE, NOIDA
Citation:- 2015 (40) S.T.R. 1091 (Tri. - Del.)
Issue:- Whether the assessee is eligible to take cenvat credit of service tax paid on Commission agent and telephone services in respect of the telephone installed at the residence of Managing Director or not?
Brief Facts:- The appellant has taken cenvat credit of service tax paid on the commission paid to the consignment agents and on the telephone charges in respect of the telephone installed at the residence of Managing Director and Director of the appellant company. The point of dispute in this case is as to whether the appellant are eligible for Cenvat credit of service tax. According to the department, the telephones were in the name of individual Director/Managing Director at their residence and not in the name of the appellant company. The Cenvat credit availed in respect of these two services is for the period from Jan., 2005 to March, 2009. The department being of the view that these services are not covered by the definition of “input service” initiated proceedings for recovery of the Cenvat credit along with interest and imposed penalty which resulted in order-in-original passed by the Addl. Commissioner by which he confirmed the above mentioned Cenvat credit demand along with interest and imposed penalty of equal amount. On appeal being filed to the Commissioner (Appeals) the above order of the Asstt. Commissioner was upheld against which this appeal has been filed.

Appellant’s Contention:- The appellant company pleaded that the main issue involved in this case regarding admissibility of cenvat credit in respect of consignment agent services stands decided in the appellant’s favour by the Tribunal’s Final Orders No. 292/2012-SM, dated 22-3-2012 and No. 524-525/2014-SM, dated 3-5-2012 in the appellant’s own case for the previous period, that in view of this, the impugned order is not correct.

Respondent’s Contention:- Department defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that so far as telephone services are concerned, the telephones are not in the name of the appellant company but in the name of the individual persons and hence, the telephone services cannot be said to have been used in relation to the business of the appellant company, that with regard to the service of the commission agent, The Respondent reiterated the findings of the Commissioner (Appeals) and pleaded that the same are not covered by the definition of ‘input service’. The Respondent quoted the judgment of Bombay High Court in the case of CCE, Nagpur v. Manikgarh Cements reported in 2010 (20)S.T.R.456 (Bom.)

Reasoning of Judgment:- The Tribunal has considered the submissions from both the sides and perused the records.
In so far as admissibility of Cenvat credit in respect of consignment agent service, which was availed for sale of the appellant’s goods, the issue stands decided in favour of the appellant by the above mentioned two judgments of the Tribunal vide Final Orders No. 292/2012-SM, dated 22-3-2012 and No. 524-525/2014-SM, dated 3-5-2012 for the previous period. Therefore, on this issue, the impugned order is not sustainable.
As regards the admissibility of Cenvat credit in respect of the telephone installed at the residences of the Managing Director and Director of the appellant company, even if the same are installed in the name of individual persons, the fact remains that it is the appellant company which benefits and as such, this service has to be treated as the service in relation to the business of the appellant company. In view of this, the impugned order disallowing the Cenvat credit in respect of the telephone installed at the residence of the Managing Director and the Director the appellant company is not sustainable.
The judgment of Bombay High Court in the case of Manikgarh Cement cited by the learned DR is not applicable to the facts of this case.
In view of the above discussion, the impugned order is not sustainable. The same is set aside. The appeal is allowed.

Decision:- Appeal Allowed
Comments:- The gist of this case is that the appellant has taken credit on the commission paid to the consignment agents and on the telephone charges in respect of the telephone installed at the residence of Managing Director and Director of the appellant company. The Tribunal has decided that the said service has to be treated as the service in relation to the business. The main issue involved in this case regarding admissibility of cenvat credit in respect of consignment agent services stands decided in the appellant’s favour by the Tribunal’s order for previous period.

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PJ/CASE LAW/2016-17/3058

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