Appellant denied Cenvat credit on immovable property; penalties overturned; specific post-2006 credit allowed.

The Tribunal held that the appellant is not entitled to avail Cenvat credit on towers, shelters, and pre-fabricated buildings as they are considered immovable property. The extended period of limitation was deemed not invocable, and penalties on the appellant were set aside due to no suppression of facts. However, post-2006, the appellant can claim Cenvat credit on specific items if Excise duty was paid. The final order allowed Cenvat credit on certain items but set aside demands beyond the normal limitation period and penalties.

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Issues Involved:
1. Entitlement to avail Cenvat credit on towers, shelters, and pre-fabricated buildings.
2. Invocability of the extended period of limitation.
3. Imposability of penalties on the appellant.

Issue-wise Detailed Analysis:

Issue No. 1: Entitlement to Avail Cenvat Credit
The Tribunal concluded that the appellant is not entitled to avail Cenvat credit on towers, shelters, and pre-fabricated buildings. This decision aligns with the Larger Bench's ruling in the case of BSNL and others, which determined that such items become immovable property once affixed to the earth and thus do not qualify as capital goods or inputs. The Tribunal referenced similar decisions in Vodafone Essar Mobile Services Ltd. and Vodafone Essar South Ltd., reinforcing the stance that these items do not qualify for Cenvat credit.

Issue No. 2: Invocability of the Extended Period of Limitation
The Tribunal found that the extended period of limitation is not invocable in this case. The issue of Cenvat credit on the disputed items was a matter of interpretation and had been referred to the Larger Bench of the Tribunal, indicating that there was no clear suppression of facts by the appellant. The Tribunal noted that the appellant had been filing service tax returns regularly, and the availment of Cenvat credit was disclosed. The Tribunal relied on previous decisions, including those in Vodafone Essar Mobile Services Ltd. and Vodafone Essar South Ltd., which also held that the extended period of limitation was not applicable.

Issue No. 3: Imposability of Penalties
Given the Tribunal's finding that there was no suppression or concealment of facts, the imposition of penalties on the appellant was deemed unwarranted. The Tribunal referenced judicial pronouncements that supported the view that penalties should not be imposed when the issue at hand was a matter of interpretation and had been in dispute up to the level of the Tribunal.

Final Order:
1. On merits, the appellants have no case in light of the decision of Bharti Airtel Ltd. of the Hon’ble High Court of Bombay.
2. Post-2006, where appellants are paying service tax under the category of Business Auxiliary Services or Business Support Services for providing passive infrastructure, they are entitled to take Cenvat credit on towers, pre-fabricated shelters, and parts thereof.
3. In appeal no. ST/777/2009, the appellant is entitled to take Cenvat credit to the tune of Rs. 2,59,95,327/- on shelters/parts as capital goods where the supplier has paid Excise duty on these items by classifying them under Chapter 85 of the Central Excise Tariff Act 1985.
4. The extended period of limitation is not invocable; therefore, demands beyond the normal period of limitation are set aside.
5. Penalties imposed on the appellants are set aside.

Separate Judgment:
One member expressed a respectful disagreement with the order allowing Cenvat credit on towers and pre-fabricated buildings, citing the Bombay High Court's judgment in Bharti Airtel Ltd., which held that such items are immovable property and not goods. This member emphasized that the classification or output service context does not alter the immovable nature of the towers, thus maintaining that Cenvat credit is not permissible.

Conclusion:
The appeal was disposed of with the following terms:
- Demand along with interest within the period of limitation is confirmed.
- Demand for the extended period of limitation is set aside.
- Penalty imposed on the appellant is set aside.

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