Service Tax
TRT-2025-
Cestat-Chennai
Date:-13-06-22
In:-
Issue Favourable to Tax Payer ?:- 0
Order Date: 13 June 2022
Facts:
- The Appellant, M/s Vodafone Cellular Ltd., had availed CENVAT credit of excise duty, service tax paid on inputs and capital goods. Later, with a view to sharing of passive infrastructure among mobile operators and by way of a scheme of arrangement duly approved by the Hon’ble High Court of Madras on 19.11.2019, the appellant demerged its Passive Infrastructure Assets to a new and separate legal entity M/s. Vodafone Essar Infrastructure Ltd. They did not reverse the credit availed by them.
- The department was of the view that the appellant has to reverse the credit availed by them on capital goods in terms of Rule 3(5) / Rule 3(5A) of CENVAT Credit Rules, 2004. Show Cause Notice was issued proposing to recover the ineligible credit along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand along with interest and imposed equal penalty.
- Aggrieved by such order, the appellants are now before the Tribunal.
Issue:
- Whether the appellants are liable to reverse the credit on capital goods consequent to the formation of another company Vodafone Essar Infrastructure Ltd. by which there is transfer and merger of Passive Infrastructure Assets of the appellant as per the scheme of arrangement?
Order:
- The Tribunal observed that there is no dispute that even after transfer, the capital goods are continued to be used by the appellant for providing output service. The Tribunal in the appellant’s own case has analyzed the very same issue.
- The Tribunal relied upon the decision of the Hon'ble Supreme Court in the case of JK. Cotton Spinning and Weaving Mills Ltd. and another vs Union Of India And Others to observe that removal means physical and actual removal of the goods from the factory to any other place. In the present case, there is no physical removal of capital goods from the premises of the appellant. The Tribunal accordingly held that appellant is not required to reverse the CENVAT credit as the capital goods have not been physically removed from the premises where they were initially installed.
- Therefore, the demand cannot sustain. The impugned order is set aside and Appeal filed by appellant is allowed.
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