TaxTMI 
TaxTMI 
TaxTMI 
2021 (4) TMI 306
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....7.2009 seeking to deny the erroneous credit amounting to Rs. 7,89,56,288/- and to impose penalty under Section 78 of the Finance Act and Rule 15(1) of the CCR, 2004. The same was confirmed by Order-in-Original No. 03/2010 (ST) dated 17.02.2010 which is subject of discussion in the appeal. 2. The Learned Counsel for the appellants submits that the towers and pre-fabricated buildings on which CENVAT credit has been availed are capital goods and therefore, CENVAT credit is correctly availed as: * The towers/ tower materials and pre-fabricated shelters which are integral to the erection of the cell sites for providing cellular coverage in public areas are capital goods used in providing the output service for the Appellants. * A cell site of a cellular operator consists of antennae which receive and transmit signals so as to facilitate the Telecommunication service of the Appellants. These antennae are mounted on the tower and a typical tower would have more than four or five antennae to receive the signal and transmit the signal. * Therefore, tower/tower materials and pre-fabricated shelters would fall under 'Components, Spares and Accessories' of capital goods since they act a....
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.... wrong presumption that the goods in question are immovable properties and accordingly the "permanency test" as llaid down by the Supreme Court in Solid and Correct Engineering (2010-TIOL-25-SC-CX) was not applied by the Hon'ble Bombay High Court * Relying on the ratio of the decision of the Hon'ble Delhi High Court in Vodafone Mobile Services Ltd and Others 2019 (27) G.S.T.L. 481 (Del.), the Hon'ble Chandigarh Tribunal in the case of CCE Gurgaon v. Bharti Infratel Ltd Final Order No. 60267-60269/2019 dated 21.02.2019 passed by Hon'ble CESTAT Chandigarh and BharatiInfratel Ltd v. Commissioner of Service Tax, Delhi Final Order No. 60592-60594/2019 dated 22.05.2019 passed by Hon'ble CESTAT Chandigarh has allowed the credit on angles, beams, channels and prefabricated structures/shelters. * Accordingly, the decision of the Hon'ble Delhi High Court followed by the Hon'ble Chandigarh Tribunal will be squarely applicable in the present appeal and therefore the appeal is to be allowed on merit. 2.3. Learned Counsel further submits that the demand is anyway time barred as: * The availability of credit on towers, angles, channels, beams and shelters have always been a subject matter ....
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....abricated buildings/shelters etc used for erecting transmission towersare not directly used for providing the output service though the same are used indirectly; the definition of input cannot be given an enlarged connotation in absence of the words 'directly or indirectly' and 'in or in relation to'; the transmission towers are admittedly attached to earth. Erection of towers attaching to earth does not amount to manufacture of goods and therefore the erected towers cannot be called as capital goods; merely for the sake of availing Cenvat credit of duty paid on the material used in erecting towers, the Appellant cannot classify the towers under Chapter 85 of the Central Excise Tariff and claim that the angles, channels and beams are component and accessories of capital goods; extended period of limitation can be invoked as the Appellant has not declared the details of items on which credit has been taken in the ST-3 returns filed by them; the Appellant is liable to pay Interest under Section 75 of Finance Act, 1994 and penalty is imposable under Rule 15(1) of the Cenvat Credit Rules,2004. 5. We find that Hon'ble Bombay High Court has upheld the stand of the Department in the case....
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....ndent functions and hence, they cannot be treated and classified as single unit. It is clear that all capital goods are not eligible for credit and only those relatable to the output services would be eligible for credit. The goods in question in any case cannot be held to be capital goods for the purpose of Cenvat credit as they are neither components, spares and accessories of goods falling under any of the chapters or headings of the Central Excise Tariff Schedule as specified in sub-clause (i) of the definition of capital goods. Hence a combined reading of sub-clauses (a)(A) (i) and (iii) and sub-rule (2) indicates that only the category of goods in Rule 2(a)(A) falling under clause (i) and (iii) used for providing output services can only qualify as capital goods and none other. Admittedly the goods in question namely the tower and part thereof, the PFB and the printers do not fall within the definition of capital goods and hence the appellants cannot claim the credit of duty paid on these items. Even applying the ratio of the judgments as relied upon by the appellants as observed above the said goods in the present context cannot be classified as capital goods. 32. As regar....
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....e 2(a)(A)(i) towers become accessories of antenna and should be held as capital goods for availing of credit of duty paid. The argument at the first blush appeared to be attractive however a deeper scrutiny shows that the same is without substance. It would be misconceived and absurd to accept that tower is a part of antenna. An accessory or a part of any goods would necessarily mean such accessory or part which would be utilized to make the goods a finished product or such articles which would go into the composition of another article. The towers are structures fastened to the earth on which the antennas are installed and hence cannot be considered to be an accessory or part of the antenna. The position in this regard stands fortified from the decision of the Supreme Court in the case of "Saraswati Sugar Mills v. CCE, Delhi [2011 (270) E.L.T. 465]". From the definition of the term 'input' as defined in 2(k) of the Credit Rules it is clear that the appellant is a service provider and not a manufacturer of capital goods. A close scrutiny of the definition of the term capital goods and input indicates that only those goods as used by a manufacturer would qualify for credit of the du....
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....igh Court that those two judgments are contrary to settled judicial precedents, including the later view of the Supreme Court in Solid and Correct Engineering (supra). In this conclusion, it is held that the Tribunal clearly erred in concluding that the towers and parts thereof and the prefabricated shelters are not capital goods with the meaning of Rule 2(a) of the Credit Rules. This question is answered in favour of the assessee and against the Revenue. 49. The allied question is alternatively, whether towers and shelters would qualify as "inputs" under Rule 2(k) of the Credit Rules. The assessees had urged that the tower (and parts thereof) and the pre-fabricated shelters would also qualify as 'inputs' used for providing output service. This contention is based on sub-clause (ii) of clause (k) of Rule 2 (definition of "input") of the Credit Rules. They rely on Godfrey Phillips India Ltd. v. Union of India - 1990 (48) E.L.T. 508, where the term 'input' was interpreted and the Court held as follows : "All that the company then seeks is relief or credit qua duty already once and earlier paid on Tariff Item No. 68 goods going into the manufactured product which is finally render....
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....out dismantling, are actually dismantled into their components/parts for ease of transportation etc., they will not cease to be dutiable merely because they are transported in dismantled condition. Rule 2(a) of the Rules for the Interpretation of Central Excise Tariff will be attracted as guiding factor is capability of being marketed in the original form and not whether it is actually dismantled or not, into is components. Each case will therefore have to be to decided keeping in view the facts and circumstances, particularly whether it is practically possible (considering the size and nature of the goods, capability of goods to move on self-propulsion - ships etc.) to remove and sell the goods as they are, without dismantling into their components. If the goods are incapable of being sold, shifted and marketed without first being dismantled into component/parts, the goods would be considered as immovable and therefore, not excisable to duty. (vii) When the final product is considered as immovable and hence not excisable goods, the same product in CKD or unassembled form will also not be dutiable as a whole by applying Rule 2(a) of the Rules of Interpretation of Central Excise T....
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.... only to the factory or manufacturer and would not apply to the service provider. According to him, either before the amendment made in the year 2009 or thereafter, the appellant was neither factory nor manufacturer and he has only constructed jetty by use of cement and steel for which he was entitled for input credit as jetty was constructed by the contractor, but the jetty is situated within the port area and the appellant is a service provider. According to the appellant, his case is squarely covered by the judgment of the Division Bench of the Andhra Pradesh High Court in Commissioner of Central Excise, Visakhapatnam-II v. Sai Sahmita Storages (P) Limited, 2011 (270) E.L.T. 33 (A.P.) wherein in paragraph 7, it has been clearly held that a plain reading of the definition of Rule 2(k) would demonstrate that all the goods used in relation to manufacturer of final product or for any other purpose used by a provider of taxable service for providing an output service are eligible for CENVAT credit. It is not in dispute that the appellant is a taxable service provider on port under the category of port services. Therefore, the appellant was entitled for input credit and the decision o....
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....would have provided material to the contractor and labour contract would have been given. The appellant claims that he has provided cement, steel etc. for which he was entitled for input credit and, therefore, in our opinion, the appellant was entitled for input credit and it cannot be treated that since construction of jetty was exempted, the appellant would not be entitled for input credit. The view taken contrary by the Tribunal deserves to be set aside.'' ----- 72. In the present case, it is not in dispute that the appellant is a taxable service provider providing passive telecommunication service. Therefore, the assessee is entitled for input credit on the weight of judicial authority discussed above. It is also clear that several High Courts in different contexts have taken a view that credit of excise duty and service tax paid would be available irrespective of the fact that inputs and input services were used for creation of an immovable property at the intermediate stage, if it was ultimately used in relation to provision of output service or manufacturing of final products. 73. The conclusion of CESTAT, denying the assessee Cenvat credit on the premise that the towe....
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.... by the appellant, we find that various Benches of the Tribunal have held that the appellants are not entitled to take Cenvat credit on tower/tower materials and prefabricated buildings/shelters as capital goods as well as inputs. We also find that this issue has been subject matter of litigation before various Benches of the Tribunal and the matter was also referred to the Larger Bench and finally the Larger Bench in the case of Tower Vision (India) Pvt. Ltd. cited supra answered the reference in favour of the Revenue vide its order dated 16-3-2015 disposing of various appeals including the appeal of the appellant. The Tribunal in the said decision has also followed the decision of the Karnataka High Court in the case of CCE, Bangalore v. MTR Food Ltd. [2012 (282) E.L.T. 196] wherein it has been held that if the returns were filed properly and audit has also taken place, then there are no allegation of bona fide on the part of the assessee and in such a situation extended period cannot be invoked. The Learned Counsel for the appellant fairly conceded that in view of the various decisions, the issue has been held against the assessee and in favour of the Revenue but he only prayed ....