CENVAT credit is allowed to output service providers in respect of input services consumed by them used in providing output service.
It is often argued that CENVAT Credit is not allowed on Service Tax paid on mobile phones.
Argument is backed by Circular No. 59/8/2003 dated 20.06.2003.
According to me CENVA credit is available on mobile bills also. i am supporting my view point by following two arguments
Argument: 1.
The Service Tax Credit Rules, 2002 has been substituted by CENVAT Credit Rules, 2004 vide notification no. 23/2004-CE(NT), dated 10-09-2004. The new Rules does not contain any prohibition to take credit of service tax paid on mobile phone. Hence cenvat credit on moblile phone is available w.e.f. 10-09-2004.
Argument: 2.
In the case of "Indian Rayon & Industries Ltd. vs. CCE Bhavnagar 2006 (4) STR 79 (Tri-Mumbai)", the Tribunal Held that service tax paid on mobile phone is available as credit to eligible service providers/manufacturers in the absence of any express prohibition under CENVAT Credit Rules, 2004. It is further held that Board's Circular No. 59/8/2003-ST dated 20-06-2003 was relevant only under the erstwhile Service Tax Credit Rules, 2002 and can not be mad applicable to CENVAT Credit Rules, 2004.
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