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ST - ' Photography Service' -Lighting equipments, Gloves and Tissues would fall under the definition of capital goods being parts/accessories of capital goods - credit admissible: CESTAT

By TIOL News Service

HYDERABAD, APRIL 21, 2017: ASSESSEE, a service provider, had imported Electronic Ballasts and its accessories and other items and availed credit on such items under category of capital goods.

Department entertained the view that such lighting equipment used for outdoor film shooting cannot be treated as components/spares or accessories of capital goods.

Whereas the the original authority confirmed the demand along with interest and penalty, the Commissioner (A) set aside the order.

Hence, Revenue is in appeal before the CESTAT.

The Bench observed that the issue to be analyzed is whether the goods imported namely, lighting equipments, Gloves and Tissues would fall under the definition of capital goods being parts/accessories of capital goods.

Noting that the Commissioner (A) had made lengthy and proper discussion with regard to the use and purpose of the items imported, the CESTAT found it apt to reproduce the same (as below) -

+ Lighting Equipment (imported) were being used for outdoor film shooting. Cinematographic cameras, which are assessee's main equipment/capital goods for provision of 'photographic services', cannot be effectively used unless they are supplemented with specialized lighting equipment which meets the requirement to generate adequate light for outdoor shooting. Therefore, lighting equipment certainly qualify itself to be treated as an accessory to the Cinematographic Cameras. Hence, the Appellants were eligible for CENVAT credit of CVD/ED paid on the lighting equipment, credit availed on Picture Tube for Analyzer Machine was also admissible.

+ Picture Tube for Analyzer Machine (capital goods) is a spare as they procured the said Picture Tube to replace the defunct picture tube of the Analyzer Machine. As the Analyzer Machine is used to view the negative after processing the exposed film and since the said Picture Tube was a spare to the said capital item, credit availed on Picture Tube for Analyzer Machine was also admissible.

+ Kim Wipes - Lens cleaning Tissues and the Leather Hand Gloves are being used to keep the expensive cameras very clean and to avoid possible growth of fungus on the lenses and also to ensure the best possible quality of the picture by keeping the lenses clean - appellants contention that they qualify as cinematographic accessories can be accepted. Similarly, the timing belt, spring & roll pin assortment and other cinematographic accessories can be treated as accessories to their capital goods used in the provision of their output service.

Concluding that the imported goods fall within the definition of parts and accessories of capital goods and the CVD paid thereon is admissible as CENVAT credit, the impugned order was maintained and Revenue's appeal was dismissed.

(See 2017-TIOL-1337-CESTAT-HYD)


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