ORDER
Chittaranjan Satapathy, Member (T)
1. The impugned order denies credit of Service Tax paid on Mobile Phones which have been provided by the appellants to their employees to carry out business transactions. Shri J.C. Patel, learned Advocate appearing for the appellants states that under the Service Tax Credit Rules, 2002 it was stipulated under Sub-rule (6) of Rule 3 that Service Tax credit on the service provided in relation to telephone connection shall be allowed only in respect of such telephone connections which are installed in the premises from where the out put service is provided. The learned Advocate also states that in the context of the said Sub-rule 3(6), the Circular No. 59/8/2003, dated 20-6-2003 was issued clarifying that Mobile Phones are not covered for availing credit of Service Tax. Mr. J.C. Patel further states that under the present Rules viz. Cenvat Credit Rules, 2004, there is no such restriction on Mobile Phones and the definition of input service under the new Rules covers Mobile Phones. He also states that the amount involved in this case is small but the issue involved is important which requires decision by the Tribunal as the appellants are incurring recurring expenses towards Service Tax on Mobile Phones and hence he prays for admitting the appeal.
2. In view of the submissions made and in view of the legal provisions cited above, I admit the appeal and waive the requirement of pre-deposit and take up the appeal for decision.
3. The old Circular dated 20-6-2003 on which sole reliance has been placed by the lower appellate authority for denying the credit of Service Tax paid by the appellants was relevant under the old Service Tax Credit Rules, 2002 which required specifically the telephones to be installed in the premises of the Service Provider to be eligible for such credit. There is no such stipulation in the new Cenvat Credit Rules, 2004 and hence the old Circular cannot be pressed into service against the appellants. More over, the lower appellate authority was required to decide the appeal strictly in terms of the legal provisions in force at the material time, which in this case is December, 2004 to February, 2005, during which the Cenvat Credit Rules, 2004 were applicable.
4. I find that Rule 4(1) of the Cenvat Credit Rules, 2004 states that credit in respect of inputs may be taken on receipt of the inputs in the factory of the manufacturer or in the premises of the provide of output service. But no such stipulation regarding receipt of input service, which is separately defined under the Rules, is provided. Sub-rule (7) of Rule 4 of the Cenvat Credit Rules, 2004 merely provides that Cenvat credit in respect of inputs service shall be allowed on or after the date on which payment is made for the value of input service and the service tax paid or payable is indicated in the invoices, bills or challans. I do not find anywhere in the Rules any provision disallowing credit of service tax paid on mobile phones, which in any case is fast replacing fixed line phones in many establishments.
5. In the absence of any express prohibition, under the new Cenvat Credit Rules, 2004, I am of the view that Service Tax paid on Mobile Phone is available as credit to eligible Service providers of out put service and manufacturers. Accordingly, the impugned order is set aside and the appeal is allowed with consequential benefit to the appellants.
(Dictated and pronounced in Court)