TaxTMI 
TaxTMI 
2019 (9) TMI 837
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....ons of Rule 14 of The CENVAT Credit Rules, 2004, read with the proviso to Section 73(1)/ Section 73(1) of Chapter V of the Finance Act, 1994. SCN No. Dated Period CENVAT Credit Demanded in Rs Credit of Input Service used in BTS Towers and Shelters disallowed (as per this order) F No ST/MUM/Dn.III/ Gr 1/SCN/ Ext/Idea/Lucknow/09 dated 29.09.2010 April 2005 to September 2009 85,27,52,966 68,63,48,450 F No ST/MUM/Dn.III/ Gr 1/SCN/ Ext/Idea/Lucknow/12/09 /271 dated 21.04.2011 October 2009 to September 2010 2,86,69,096 1,29,12,941 F No ST/MUM/Dn.III/ Gr 1/SCN/ Ext/Idea/Lucknow/12/09 dated 19.04.2012 October 2010 to September 2011 1,11,93,978 49,879,88 Total Rs. 89,26,16,040 70,42,49,379 The CENVAT credit for the 1st SCN has been ordered invoking extended period. The CENVAT credit of Rs. 18,83,66,661/- (Rupees Eighteen Crore Eighty Three Lakhs Sixty Six Thousand Six Hundred and Sixty One only) on OFC duct is ordered to be allowed. ii) I order for recovery of interest in terms of Rule 14 of CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994 on the amount confirmed at (1) above. (iii) I ....
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....ioner by the impugned order referred to in para 1, supra. Aggrieved by the order of Commissioner, appellants have filed this appeal before tribunal. 3.1 We have heard Shri S S Gupta, Chartered Accountant (CA) for the appellant and Shri M K Sarangi Additional Commissioner, Authorized Representative (AR) for the revenue. 3.2 Arguing for the Appellant learned CA while reiterating the arguments made in appeal submitted that:- i. CENVAT credit in respect of the input services used for commissioning and erection of the towers has been allowed by the Tribunal in their own case {[2016-TIOL-1198-CESTAT-MUM], [2016-TIOL- 2486-CESTAT-MUM], [2017-TIOL-975-CESTATMUM]} ii. Similar view has been expressed by the tribunal in cases of similarly placed assessees i.e M/s Air Cellular Ltd, M/s Vodafone Essar South Ltd the decision reported at [2018-(1)-TMI-1218-CESTATChennai]. iii. The decision of Bombay High Court referred to by the revenue is not applicable in the present case as: a. It relates to disallowing the credit on inputs and not input services; b. The credit has been disallowed on the inputs used on the premise that after erection the tower....
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.... 2009 can only be sustained. The demand amounting to Rs. 63,08,15,017/- for the period prior to that is not maintainable. i. No penalty can be imposed in facts and circumstances of this case. 3.3 Arguing for the revenue learned AR while reiterating the findings rendered by the adjudicating authority in impugned order submitted that:- i. In case of Navratna S G Highway Prop Ltd [2012 (28) STR 166 (T-Ahd)] it has been held that the definition of input and input services are pari materia so far as service provider is concerned. ii. Gujarat High Court has in case of Mundra Ports an SEZ [2015 (39) STR 726 (Guj)] while allowing the credit in respect cement and steel used in construction of jetties and commercial buildings following the decision of Andhra Pradesh High Court in case of Sai Sahmita Storage Ltd observed that as per Rule 2(k) all the goods used in relation to manufacture of final product or for any other purpose used by provider of taxable service for providing output service will be eligible for CENVAT Credit. iii. Bombay High Court has in case of Bharti Airtel did not found the decision of Sai Samhita applicable and has in para 27 held....
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....l testing & analysis services used for erection and commissioning of telecom towers, by the telecom service providers. 4.3 The definition of "input" and "input services" as they existed prior to 31.04.2011 is reproduced below: "(k) "input" means- (i) all goods, ............., within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service; Explanation 1.- ................ Explanation 2.- ........................" (l) "input service" means any service,- (i) used by a provider of taxable service for providing an output service; or (ii) used by the manufacturer, ............, and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality con....
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....so availed was utilised for payment of service tax on output service viz. Cellular Mobile Service being provided by the appellant. 20. In respect of a service taxable under Section 65 of the Finance Act, 1994 for payment of service tax on the output service an assessee can utilize Cenvat credit of the duty paid on capital goods and inputs provided such 'capital goods' and 'inputs' fall within the respective definitions under Rule 2 of the Credit Rules. A perusal of the definition of 'capital goods', 'inputs' and reveal the following position :- (i) Capital goods .........., (ii) Inputs All goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, wi....
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....rt paid service tax and penalty thereon. The assessing authority passed an order-in-original confirming the show cause notice and demanding service tax and interest thereon. The assessee had preferred an appeal before the Commissioner of Central Excise which came to be dismissed. Before the High Court, it was contended by the Revenue that the cement used for making foundation and TMT bars used for reinforcement, cannot be treated as capital goods as defined in Rule 2(a) of the Rules and that the assessee had wrongly claimed credit when the items were outside the definition of input under Rule 2(k).That the assessee had suppressed this fact and filed returns adjusting the credit to which the assessee was not entitled to. In the context of the definition of 'storage and warehousing' as falling under Section 65(102) of the Finance Act, the Court considered the definition of 'input' and 'input service' under the Credit Rules and in that context it was observed in paragraph (7) that the definition of 'input' and 'input services' would show that, unless excluded, all goods used in relation to manufacture of final product or for any other purpose used by a provider of taxable service for ....
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....ng process and without its use it is impossible to manufacture the final product. Therefore, none of the categories in the inclusive part of the definition would constitute relevant consideration per se. They become relevant only when the above crucial requirement of being "used in or in relation to the manufacture" stands complied with. In our view, one has to therefore read the definition in its entirety." The reliance on this judgment may not be helpful to the appellants inasmuch as the definition of storage and warehousing as contained in Section 65(102) of the Finance Act itself stand on a different footing. In that context the Division Bench of Andhra Pradesh High Court has held that use of cement and TMT bars by the assessee for providing storage facility has become integral part of storage and warehousing and without the use of cement and TMT bars, storage and housing could not have been provided. However, in the present case the facts are distinct. The towers are admittedly immovable structures and non-marketable and non-excisable. We therefore, of the clear opinion that this judgment of the Division Bench of Andhra Pradesh High Court is inapplicable in the facts ....
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.... to the towers and PFB in view of the fact that they are not directly used for the output services namely telecommunication services and further as they are non-excisable and hence, not falling within the definition of 'input' as defined under Rule 2(k) of the Credit Rules. (b) The decision of the Supreme Court in the case of "Member, Board of Revenue, West Bengal v. M/s. Phelps & Co. (P) Ltd. - (1972) 4 Supreme Court Cases 121" concerned the issue in regard to the gloves used by workmen engaged in hot jobs and handling corrosive substances to qualify as goods used in the course of manufacture of the goods for sale. The issue which fell for consideration was under the Bengal Finance (Sales Tax) Act, 1941. ......... As this decision concerned the manufacturing of excisable goods which is different from the present context of a excisable service namely telecommunication service, the same is of no avail to the appellant. (c) The decision of the Supreme Court in the case of "Commissioner of Customs, Kolkata v. Rupa and Co. Ltd. [2004 (170) E.L.T. 129 (S.C.)]" the facts were that under Notification No. 29/97-Cus., dated 1-4-1997 exemption from customs duty was....
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....ations of the Supreme Court in this decision as relied upon by the appellants, it is clear that the Supreme Court had construed the provisions of the notification by which exemption was granted. As the notification did not bar use of Ammonia from any indirect use in the factory of the assessee, the Supreme Court held that the water treatment plant, steam generation plant and inert gas generation plants are part and parcel of composite process and that Ammonia used in these ancillary plants is also used in manufacture of fertiliser. (e) In the decision of the Supreme Court in the case of "J.K. Cotton Spg. & Wvg. Mills Co. Ltd. v. Sales Tax Officer, Kanpur [1997 (91) E.L.T. 34 (S.C.)]" the issue arose under the Central Sales Tax Act, 1956 in respect of the business of the assessee dealing in manufacture of cotton textiles, tiles and other commodities for sale. The assessee was dealing in the goods which were ordinarily purchased in the course of inter-State trade for which it had sought registration as dealer under Section 7(1) of the Central Sales Tax Act, 1956 in respect of the items viz. coal. In the registration certificate the Sales Tax Officer cancelled the specificati....
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....case as falling under the definition of 'input' as defined under Rule 2(k) would not permit the interpretation as it became possible under the Central Sales Tax Act as in this decision of the Supreme Court, as the towers and PFB cannot be considered to be an integral part of the output services viz. telecommunication services, inasmuch as the telecommunication services become viable on account of antenna, the towers and PFB are immovable in nature fixed to the earth and cannot be regarded as essential inputs inasmuch as an antenna can be installed irrespective of tower or one tower can install number of antennas for different service providers and hence, the same cannot be regarded as integral part of the output services as being provided by the appellants. (f) The appellants then placed reliance on the decision of Andhra Pradesh High Court in the case of "Indus Towers Ltd. v. CTO, Hyderabad [(2012) 52 VST 447]", on the basis of which the appellant contend that the towers and the PFB being employed in erection and maintenance of cell phone towers are integral to telecommunication network and hence qualify as inputs under the Credit Rules. The issue in the case of Indus Tow....
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....e said provision. The Division Bench in this case was examining three aspects, firstly the goods as procured by the dealer in the context of the registration obtained by the dealer under the Central Sales Tax Act by procuring 'C' form under the Central Sales Tax Act and the benefit of the 'C' forms whether would be entitled in the context of the provisions of Section 8(1) and 8(3)(b) of the Act. The Division Bench was dealing in a case arising under the Central Sales Tax Act and was examining the benefits which would be available to the dealer of reduction in duties on a "C" form being availed by the dealer. It is in this context that the Division Bench had come to the conclusion that the cell phone towers are integral to telecommunication network. Secondly, the expression "telecommunication network" was being considered in the context of Section 8(1) read with Section 8(3)(b) of the Central Sales Tax Act. It was also observed that in the case of "State of Andhra Pradesh v. Bharat Sanchar Nigam Ltd." (supra) ruling of the Division Bench of Andhra Pradesh High Court, it was held that telecommunication tower is immovable property and that it being an immovable property must have dire....
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....anks for storing ammonia at its premises situated at JNPT and had claimed that it is eligible for Cenvat credit of service tax paid on input services used for the ammonia storage tanks installed at JNPT so that input/raw material stored therein was intended for manufacture of the final product at the factory of the appellant at Taloja. The Cenvat credit in respect of the services of consulting engineers, technical inspection and certification, construction, erection, commissioning and installation services for the installation of the ammonia storage tanks was claimed. The facts of this case can no manner apply to towers and parts thereof, prefabricated building/shelter which are immovable property and not excisable goods and hence, reliance on this judgment is misconceived. 27. The reliance of the appellants on the decision of the learned Single Judge of the Calcutta High Court in the case of "Singh Alloys & Steel Ltd. v. Assistant Collector of Central Excise [1993 (66) E.L.T. 594 (Cal.)]" to contend that it is impossible to conceive that telecommunication service can be provided without towers and shelters and functional utility test is required to be applied, is also mis....
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....ss which was commercially expedient in the production of goods [See : Collector of Central Excise v. Eastend Paper Industries; Collector of Central Excise, Jaipur v. Rajasthan State Chemical Works; AIR 1991 SCC 2222]. That the process in question is commercially expedient has not been doubted." The contention of the appellants that the test in this judgment is the test of 'functional utility' as to determine whether the inputs are used in the manufacture of the goods. It is contended that when an item is required for providing output services of the service provider on commercial scale, it satisfies the functional utility test, and therefore, it ought to be held that the towers and shelters are inputs used for providing output services as also on the basis of functional utility test. We are afraid that this contention on behalf of the appellants cannot be accepted for the reason that the tower and parts thereof and PFB cannot be regarded as inputs as defined under Rule 2(k) of the Credit Rules and that they are not integral part of the output services viz. telecommunication services as provided by the appellants. To consider the towers and parts thereof and PFB as inputs w....
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....ourt has distinguished all the decisions relied upon by the appellant before it, in respect of the inputs used for manufacture of finished goods from the case before it. Most of the decisions relied upon by the present appellant fall in the same category and hence need not be considered. In the present case we are concerned with the input services used for providing the output services. 4.6 In terms of the definition of input services, Rule 2(l) of CENVAT Credit Rules, 2004 as it existed prior to 01.04.2011, the input services have been defined as the services used by the provider of taxable service for providing the output services and includes ......... Clearly the services in respect of which the CENVAT Credit has been claimed are not for providing the output services, but have been used for commissioning and erection of the telecom towers, which have been held by the High Court as immovable property and hence not goods. Thus the CENVAT chain is broken the moment it is admitted that these services have been used for erection and commissioning of the immovable property. The reason and logic applied by the High Court for denying the credit in respect of the "inputs" used for te....
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....onsidered opinion, the Bombay High Court do not make any distinction in respect of inputs and input services. However at least on three occasions the Bench in Mumbai has taken a contrary view. 4.8 Appellants have also relied upon the decision of Chennai Bench of Tribunal in case of Vodafone Essar South Ltd & Aircell Cellular Ltd reported at [2016(1) TMI 1218 CESTAT CHENNAI]. This decision also follows the Bombay High Court in case of Bharti Airtel for disallowing the credit in respect of inputs and the decision of Idea Cellular Ltd [2016-TIOL-2486-CESTAT-MUM] for allowing the credit in respect of 'input services' used for erection and commissioning of telecom towers by the telecom service providers. In this case bench has also referred to the decision of Chandigarh Bench in case of BSNL [2017 (47) STR 246 (T-Chan)] wherein the issue has been considered and decided by the single member in following manner- "4.It is an admitted fact on record that the appellant is a service tax assessee, duly registered under the Service Tax statute for providing the telecom services. Installation of telecom towers are for the purpose of providing the output service by the appellant. The ....