Telecom towers and shelters remained movable goods, and Cenvat credit was allowed for inputs and capital goods.

Towers and shelters erected for telecom infrastructure were treated as movable goods because fastening with nuts, bolts and a civil foundation, without intention of permanent annexation, did not make them immovable property. Goods used in the passive telecom infrastructure qualified as inputs under the Cenvat Credit Rules, 2004 because they were used in an integrated system for output services. Towers, shelters and related parts also qualified as capital goods since they were essential components of the BTS setup. On that basis, denial of Cenvat credit was not sustainable and the assessee's relief was upheld.

---

---

Issues: (i) Whether towers and shelters erected for telecom infrastructure are immovable property or movable goods; (ii) whether the goods used for setting up passive infrastructure qualify as inputs under the Cenvat Credit Rules, 2004; (iii) whether towers, shelters and their parts qualify as capital goods under the Cenvat Credit Rules, 2004.

Issue (i): Whether towers and shelters erected for telecom infrastructure are immovable property or movable goods.

Analysis: The determination turned on the permanency test and the distinction between a structure permanently annexed to the earth and equipment fixed only to ensure stability and wobble-free operation. The relevant legal meaning of movable property and immovable property was drawn from the General Clauses Act, 1897 and the Transfer of Property Act, 1882. Applying the settled principles, the fastening of towers and shelters with nuts, bolts and a civil foundation, without intention to make them a permanent part of the earth, did not amount to immovable property.

Conclusion: The towers and shelters were held to be movable goods and not immovable property, in favour of the assessee.

Issue (ii): Whether the goods used for setting up passive infrastructure qualify as inputs under the Cenvat Credit Rules, 2004.

Analysis: The definition of inputs was applied broadly to goods used for providing output services, except those specifically excluded. The functional utility test was applied to the telecom infrastructure as an integrated system. Since the towers and prefabricated shelters were used in conjunction with antennae and BTS equipment to provide business support and telecom-related services, they satisfied the statutory requirement of use for output services.

Conclusion: The disputed items qualified as inputs and Cenvat credit was admissible, in favour of the assessee.

Issue (iii): Whether towers, shelters and their parts qualify as capital goods under the Cenvat Credit Rules, 2004.

Analysis: The capital goods definition was examined with emphasis on goods falling within the relevant tariff chapter and their use in providing output service. The towers and shelters were treated as essential components or accessories of the BTS setup because they enabled effective transmission and functioning of the equipment. On that basis, they answered the statutory description of capital goods.

Conclusion: The towers, shelters and related parts were held to be capital goods, in favour of the assessee.

Final Conclusion: The denial of Cenvat credit could not be sustained on merits, the assessee's appeal succeeded, and the departmental appeal challenging the relief on limitation failed.

Ratio Decidendi: Equipment fixed to a foundation only for stability and operational efficiency remains movable unless the facts show permanent annexation to the earth; where such goods form an integral functional part of the output-service system, credit is admissible as inputs or capital goods under the credit rules.

---