BSNL Vs. COMMISSIONER OF SERVICE TAX, CHENNAI

JUDGEMENT

(1.) HEARD both sides. The issue involved in both these appeals is similar. The main demand has been made against M/s. BSNL, a Public Sector Telephone Company, on the ground of violation of 2nd proviso to Rule 3(5) of the Cenvat Credit Rules, 2004, as it stood prior to amendment of the said Rule on 1 -4 -2008, for the reason that the telephone cables in respect of which credit has been taken by the appellants were removed outside the premises and not brought back within 180 days. The ld. Advocate appearing for the appellants states that these telephone cables were not removed outside as such but, they were laid underground between telephone exchanges and between telephone exchange and the premises of the customers. There is no dispute regarding the actual position that these cables were laid underground which was essential for providing the output service viz., telephone services. There cannot be any question of bringing back these cables to the premises of M/s. BSNL, as such a step would disrupt telephone services.

(2.) IN view of the foregoing we are of the view that there has been no contravention of the 2nd proviso to Rule 3(5) as it existed at the material time. In any case, the amended Rule 3(5) provides that if any inputs or capital goods are removed outside the premises of the provider of output service for providing such service, there is no requirement for any demand of duty or reversal of credit. Hence, the impugned order is set aside and the appeals are allowed. Both the stay petitions also stand disposed off.