BSNL Vs. CCE

JUDGEMENT

(1.) APPEAL No. S/104/2007 is against denial of CENVAT credit on capital goods amounting to over Rs. 32.00 lakhs for the period 2004 - 05 and 2005 - 06 (up to June 2005).

(2.) Appeal No. S/134/2007 is against denial of CENVAT credit on capital goods amounting to over Rs. 1.10 crores as also against demand of equal amount of service tax for the period 2005 - 06 and 2006 - 07. This appeal also challenges penalties imposed on the appellants. The appellants are a PSU, who have obtained the requisite clearance from the 'Committee on Disputes' to pursue these appeals.

(3.) AFTER considering the submissions, we note that, from September 2005, there is no dispute whatsoever in relation to similar capital goods credit being availed by SSA Salem inasmuch as CSD Madurai stands registered as "first stage dealer" and, in that capacity, issues invoices covering the capital goods supplied to the SSA. The dispute is for the period prior to September 2005. The CENVAT credit in question has been denied on a technical ground. It is not in dispute that the capital goods were duty -paid, that credit of that duty was taken by the SSA Salem by satisfying the further condition the capital goods was to be used in the rendering of output service. It is settled law that a substantive benefit cannot be denied on a procedural or technical ground where the beneficiary has satisfied the sine qua non for the benefit. The case law cited by the learned Counsel will also support this proposition. We have found prima facie case for the appellants against the denial of CENVAT credit of over Rs. 32.00 lakhs, which is under challenge in Appeal No. S/104/2007. Accordingly, there will be waiver of predeposit and stay of recovery in the said appeal.