The Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) allowed Bharat Sanchar Nigam Limited ( BSNL ) to avail cenvat credit of service tax paid by private operators on interconnectivity usage charges.
The appellants are engaged in providing telecommunication service and registered under the Finance Act, 1994. The appellant paid service tax for interconnectivity services rendered to private operators and also availed cenvat credit on interconnectivity services received by them from the private operators, which they utilised in discharging their service tax liability. They were issued with a show-cause notice on the basis of the objection by the internal audit on 20.04.2012 for recovery of the cenvat credit amounting to Rs.32,29,29,999/- along with interest and penalty for availing inadmissible cenvat credit on interconnectivity services of the service tax paid by the private operators. On adjudication, the demand was confirmed with interest and penalty. Hence, the present appeal.
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The advocate for the appellant has submitted that the issue of admissibility of cenvat credit on service tax paid by the private operators on interconnectivity services is no more res integra and covered by the judgments of Coordinate Benches of the Tribunal in their own case for the circles pertaining to the respective jurisdiction.
The short issue involved in the present appeal for consideration is, whether the appellants are entitled to avail cenvat credit of service tax paid by the private operators on interconnectivity usage charges. The issue is no more res integra and covered by the judgments in the appellant’s own case by Coordinate Benches of the Tribunal.
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The Tribunal viewed that there has not been any utilisation of credit involved because of the entire credit taken at one location was taken in one office making it easy for Revenue to conduct verification as may be necessary. The argument of the appellants that the premises where the equipments are used belong to BSNL and not to any other party and it is also used for completion of services originating from Salem also are strong arguments in favour of the appellants.
Since Modvat credit is a substantial credit, the tribunal viewed that the impugned credit should not be denied on account of procedural defects of minor nature as pointed out by the Revenue. Therefore, the bench held that the impugned order is not maintainable.
A two member bench of Dr. D.M. Misra, Member ( Judicial ) and R. Bhagya Devi, Member ( Technical )
Set aside the impugned order and allowed the appeal.
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