CIRCULAR
THE CESTAT Registrar has issued a Circular stating that:
As there is confusion of adjustment of CENVAT credit against mandatory penalty, clarification have been sought from the Competent Authority. (Again the mysterious Competent Authority - who is the Competent Authority to clarify the Registrar's doubt?)
In the absence of any clarificatory circular on the issue, he has directed the Registry officials to register the appeals received on or after 06.08.2014 in the following cases:
1. If the mandatory deposit of duty or penalty has been made in cash and evidence is produced at the time of filing the appeal.
2. If the mandatory deposit of duty confirmed is made from CENVAT account and evidence thereof is produced. (He doesn't tell his staff as to what percentage of duty is to be the mandatory pre-deposit)
3. If the appellants have made deposit of the duty during investigation and if the same is more than the mandatory deposit as stipulated in the amendments.
Wherever further clarification is required the same will be issued after getting clarification from the Competent Authority.
What will he do if the pre-deposit of penalty is made from the CENVAT account? Will such appeals be not accepted by the Registry? Can the registry take such a decision? Should the appellant go to the High Court to get a direction to the Registry to register the appeal ?
F.No.15/CESTAT/General/2013-14
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST BLOCK NO.II, R K PURAM, NEW DELHI
Dated: August 28, 2014
CIRCULAR
Sub: Registration of appeals received on or after 06.08.2014 subsequent to amendment in the Customs Act, 1962, the Central Excise Act 1944 and the Finance Act, 1994- instructions- regd.
As there is confusion of adjustment of Cenvat Credit against mandatory penalty, clarifications have been sought from Competent authority. In absence of any classificatory Circular on the issue, all the DRs/ARs/TOs are directed that the appeals received on or after 06.08.2014 may be registered in following cases:
(i) If the mandatory deposit of duty or penalty, as the case may be, has been made in Cash and evidence thereof is produced at the time of filing appeal.
(ii) If mandatory deposit of duty confirmed is made from CENVAT account and evidence thereof is produced.
(iii) If the appellants have made deposit of the duty assessed subsequently, during investigation and if the same is more than the mandatory deposit as stipulated in the captioned amendments.
Whether further clarification is required the same will be issued after getting a clarification from the competent authority.
(A Mohan Kumar)
Registrar
Registrar
--
Best Wishes
CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx
CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx
Sec. 35 relief: ITAT should resolve issue of reference to prescribed authority to decide use of asset of research
September 2, 2014[2014] 48 taxmann.com 49 (Hyderabad - Trib.)
IT : Tribunal should give findings on applicability of section 35(3) while considering a deduction claim of scientific research expenditure under section 35(1)(i)
Advance sum received by service provider deemed as income only when services are rendered by it
September 2, 2014[2014] 48 taxmann.com 59 (Hyderabad - Trib.)
IT : Where an assessee receives sum for some services but said services are not to be performed in current year but in subsequent year, till performance of service by assessee, assessee cannot be said to have received amount on accrual as assessee cannot exercise its dominion over receipt and, thus, said receipt should be taxed in year in which assessee would render service to payee
Cenvat credit not available on Tower Parts & Pre-fabricated buildings
We are sharing with you an important judgment of the Hon'ble High Court of Bombay in the case of Bharti Airtel Ltd. Vs. The Commissioner of Central Excise, Pune III [2014-TIOL-1452-HC-MUM-ST]on following issue:
Issue:
Whether Cenvat credit is available to provider of Cellular Mobile Service on Tower Parts & Pre-fabricated buildings?
Facts & Background:
Bharti Airtel Ltd. ("the Appellant") is engaged in providing Cellular telephone services ("the Output Service") and accordingly paying Service tax as applicable. The Appellant availed Cenvat credit of Excise Duty on the Base Trans-receiver Station ("BTS") claiming to be a single integrated system consisting of tower, GSM or Microwave Antennas, Prefabricated building, isolation transformers, electrical equipments, generator sets, feeder cables etc., classified under Chapter 85.25 of the Central Excise Tariff Act, 1985 ("CETA"). Accordingly, the Appellant contended that Cenvat credit on said 'Capital goods' was rightly available to them under clause (i) of Rule 2(a)(A) of the Cenvat Credit Rules, 2004 ("the Credit Rules").
Rule 2(a)(A) of Credit Rules reads as under:
"(a) capital goods means:-
(A) the following goods, namely:-
(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act;
(ii) pollution control equipment;
(iii) ……………………."
The Commissioner allowed only Cenvat credit on antenna amounting to Rs. 2,38,54,970/- and disallowed the Appellant's claim for Cenvat credit amounting to Rs. 13,02,08,928/- on other items viz. the tower and parts thereof and the prefabricated building on the following grounds:
- Tower is fixed to the earth and after its installation becomes immovable and therefore, cannot be called as 'goods';
- Even in CKD or SKD condition, the Tower and parts thereof would fall under Chapter heading 7308 of the CETA which is not specified in clause (i) or clause (ii) of Rule 2(a)(A) of the Credit Rules;
- Tower and parts thereof are not directly utilised for output service as the same has been basically a structural support for certain equipment.
Applying the same reasoning, credit on prefabricated building was also rejected.
Thereafter, the Appellant preferred an appeal before the Hon'ble Tribunal where also the said demand was confirmed. Being aggrieved, the Appellant preferred an appeal before the Hon'ble High Court of Bombay.
Held:
The Hon'ble High Court of Bombay after detailed deliberation denied the Cenvat credit to the Appellant and held as under:
- It is clear that each of the components alleged to be comprised under BTS had independent functions and hence, they cannot be treated and classified as single unit.
- The tower and parts thereof are fastened and are fixed to the earth and after their erection become immovable and, therefore, cannot be goods. The towers are admittedly immovable structures and non-marketable and non-excisable.
- Further in the CKD or SKD condition the tower and parts thereof would fall under the Chapter heading 7308 of the CETA not specified in clause (i) or clause (ii) of Rule 2(a)(A) of the Credit Rules and therefore not covered under the ambit of 'capital goods'.
- The enunciation of law as laid down in the judgment in the case of Simbholi Sugar Mills Vs. Commissioner of Central Excise, Meerut [2001 (135) ELT 1239 (Tri-Del)] clearly shows that the towers are immovable property and non-excisable and hence, can neither be regarded capital goods nor can be categorized as input under the Credit Rules.
- The alternative contention of the Appellant, that tower is an accessory of antenna and that without towers antennas cannot function and cannot be installed and hence the tower should be treated as parts and components of the antenna is without substance. An accessory or a part of any goods would necessarily mean such accessory or part which would be utilized to make the goods a finished product or such articles which would go into the composition of another article. The towers are structures fastened to the earth on which the antennas are installed and hence cannot be considered to be an accessory or part of the antenna.
Therefore, on the basis of the above judgment, the Hon'ble High Court of Bombay rejected the contention of the Appellant and decided the case in favour of the Revenue.
$ 3,00,000 Award to Intenal Auditors Whistle blower!!!!!!!
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