TaxTMI 
TaxTMI 
2024 (4) TMI 1314
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....)', in accordance with CENVAT Credit Rules, 2004, was led to conclude that the submissions on behalf of the noticee to the effect that '3.2 ............ 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- CESTAT MUM]} ii. 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- CESTAT Chennai]. iii. iii. The decision of Bombay High Court referred to by the revenue is not applicable in the present case ..........' were not acceptable and, therefore, '4.6.... we do not find any merits in submissions made in this respect.' but, taking note that this conclusion was in contradistinction with three decisions of coordinate benches in disputes of the same appellant as well as of coordinate bench in Vodafone Essar South Ltd and Aircell Cellular Ltd [2018 (1) TMI 1218 CESTAT CHENNAI] vs. Commissioner of Service Tax, Chennai, whic....
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....ection of these equipment were separately initiated in jurisdictions with the former ultimately decided against assessees by the Hon'ble High Court of Bombay while the latter has, since, been decided against the appellant herein by the adjudicating authority in three notices for recovery of Rs. 70,42,49,379 for the disputed period. 3. It is common ground that the impugned 'input service' were required for erection and commissioning of the said 'structure' at the site of the appellant herein and that the decision in Bharti Airtel Ltd went against assessees on ineligibility of 'inputs' deployed for such erection and commissioning. The adjudicating authority had found itself required to decide on the correctness of the claim of the assessee that the impugned goods were not procured for 'immoveable property' and, even if so, the second limb of the inclusive part of the definitions of 'input' offered coverage as did that of 'capital goods' for the 'structures' supporting or housing the equipment which, undeniably, were deployed for rendering 'output service' that would be dysfunctional except when mounted on towers which happened to be fixed to the ground for stability; on all counts....
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....dicial determination in several instances that was rampant enough for Central Board of Excise & Customs (CBEC) to issue circular [no. 58/1/2002-CX dated 15th January 2002] for the guidance of its field formations thus '4. The plethora of such judgements appears to have created some confusion with the assessing officers. The matter has been examined by the Board in consultation with the Solicitor General of India and the matter is clarified as under:- (a) For goods manufactured at site to be dutiable they should have a new identity, character and use, distinct from the inputs/components that have gone into its production. Further, such resultant goods should be specified in the Central Excise Tariff as excisable goods besides being marketable i.e. they can be taken to the market and sold (even if they are not actually sold). The goods should not be immovable. (b) Where processing of inputs results in a new products with a distinct commercial name, identity and use (prior to such product being assimilated in a structure which would render them as a part of immovable property), excise duty would be chargeable on such goods immediately upon change of their id....
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....ice chain' is the substance of the doubt that was of importance to the referral bench. 7. Considering the period of dispute, it is also significant that definitions of the three sources - 'capital goods', 'input' and 'input services' - set out thus '3. CENVAT credit: -(1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as CENVAT credit) of ...paid on - (i) any input or capital goods...; and (ii) any input service.....' in CENVAT Credit Rules, 2004 underwent alterations in July 2009 and at the end of March 2011 respectively. The purported latitude afforded by 'activities relating to business, such as' and 'setting up' in the inclusive leg of rule 2(l) of CENVAT Credit Rules, 2004 was curtailed by excision of these expressions with effect from 1st April 2011. In rule 2(k) of CENVAT Credit Rules, 2004, Explanation 2, providing for 'goods used in the manufacture of capital goods which are further used in the factory of the manufacturer' to be 'inputs' and which was predicated by the definition of 'capital goods' in rule 2(a) of CENVAT Credit Rules, 2004, came to be ci....
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....n issue is remanded to the Commissioner for careful consideration and decision; (d) The question whether, on the facts and circumstances of this case, the appellant is liable to be penalized under Rule 15 of the Cenvat Credit Rules, 2004 and, if so, to what extent is also remanded to the Commissioner for fresh consideration and decision; (e) The appellant shall be given a reasonable opportunity of being heard on the remanded issues." as set out in Bharti Airtel Ltd. The proposition canvassed by the appellant were also set out as '23. In the context of these definitions the contentions as raised by the appellant are required to be examined. The position of the goods in question vis-a-vis the plain application of the rules is that the tower and parts thereof are fastened and are fixed to the earth and after their erection become immovable and therefore cannot be goods. Further in the CKD or SKD condition the tower and parts thereof would fall under the Chapter Heading 7308 of the Central Excise Tariff Act. Heading 7308 is not specified in clause (i) or clause (ii) of Rule 2(a)(A) of the Credit Rules so as to be capital goods. The goods in question would ....
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....service namely the cellular service. We may observe that a plain reading of the definition of 'capital goods' as defined under Rule 2(a)(A) of the Credit Rules show that all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, Heading No. 6805, grinding wheels and the like, and parts thereof falling under Heading 6804 of the First Schedule to the Central Excise Tariff Act; pollution control equipments; components, spares and accessories of the goods specified at sub-clauses (i) and (ii) which are used either in the factory for manufacture of final products but does not include any equipment or appliance used in the office and those used for providing output service. Further in the CKD or SKD condition the tower and parts thereof would fall under the Chapter Heading 7308 of the Central Excise Tariff Act. Heading 7308 is not specified in clause (i) or clause (ii) of Rule 2(a)(A) of the Credit Rules so as to be capital goods. Further the appellants contention that they were entitled for credit of the duty paid as the Base Transreceiver Station (BTS) is a single integrated system consisting of tower, GSM or Microwave Antennas, Prefabricated building, isolation tran....
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....) 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 (2) of sub-rule (k) is also which provides that input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. A plain reading of the definition of input indicates that in the present context, clause (i) of Rule 2(k) may not be of relevance as same pertains to manufacturing activity and pertains to goods used in relation to manufacture of final product or any other purpose within the factory of production. Sub-clause (ii) has been referred to as relevant by the appellant as the same pertains to goods except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service. Tower and parts thereof are fastened and are fixed to the earth and after their erection become immovable and therefore cannot be goods. 33. The alternative contention of the appellant is that tower is an accessory of antenna and that without towers antennas cannot be installed and as such the antennas cannot f....
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....nd commissioning of structures on which equipment required for providing 'telecommunication service' were mounted. He submitted that the structures themselves were not relevant to availing of credit by them as '3. CENVAT credit. - (1) ......a provider of taxable service shall be allowed to take credit (hereinafter referred to as CENVAT credit) of - ...(ix) the service tax leviable under section 66 of the Finance Act: and (x) the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance Act (No.2) Act, 2004 (23 of 2004), paid on - (i) any input or capital goods received in the ..premises of the provider of output service....and (ii) any input service received..... by the provider of output service....' of CENVAT Credit Rules, 2004 distinguished between credit on 'input' and on 'input service' that could be availed by manufacturer of final product and provider of output service. He argued that the deployment of expressions to define 'input' and 'input service', in rule 2(k) and 2(l) of CENVAT Credit Rules, 2004 respectively, leaves no room for doubt that the two stood on entirely different foundati....
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....B & HARYANA HIGH COURT] thus '7. We are entirely in agreement with Mr. Amrinder Singh's submission on behalf of the respondents, that the Cenvat credit taken of the tax paid in respect of the said input services can be utilized by the respondents in accordance with the Cenvat Credit Rules. Mr. Amrinder Singh rightly analysed Section 2(l) by dividing it into two parts terming them the 'mean' part and the 'includes' part and that the present case would fall under both the parts of the definition as the phraseology is wide enough to cover the said services, the same being directly or indirectly or in any event in relation to the manufacture of the respondents' final product. 8. The land was taken on lease to construct the factory. The factory was constructed to manufacture the final product. The land and the factory were required directly and in any event indirectly in or in relation to the manufacture of the final product and for the clearance thereof up to the place of removal. But for the factory the final product could not have been manufactured and the factory needed to be constructed on land. The land and the factory are used by the manufacturer in any event in....
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....r construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or the person authorised by the builder before grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force shall be deemed to be service provided by the builder to the buyer." 11. If in fact the said services were not covered by Rule 2(l), it would not have been necessary to introduce the amendment. It is clear, therefore, that prior to the amendment the setting up of a factory premises of a provider for output service relating to such a factory fell within the definition of 'input service.' The amendment of 2011 is not retrospective and is not applicable to the respondents' case.' 12. Referring to '13. At this stage Mr. Amrinder Singh, Advocate for the respondent brings to our notice that an information had been sought from the appellant-department under the Right to Information Act and by way of response it had been informed that the decision in Bellsonica Auto Components India P. Ltd. (supra) had been accepted by the department. Such factual premise is not disputed by Mr. Taj....
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....VAT Credit Rules, 2004, which governs the core of the scheme, is unambiguous on eligibility of the two classes of assessees, viz., under Central Excise Act, 1944 and Finance Act, 1994, for taking credit of duty/tax liability borne by them on procurement of 'capital goods' and 'input' from manufacturers and of 'input service' from providers of service. As the appellant herein is, just as the assessee before the Hon'ble High Court of Bombay was, provider of 'telecommunication service', we are not required to enlarge the factual framework beyond that limited context. Hence, response to reference is all about the eligibility of 'capital goods' and 'inputs' used for providing any 'output service' that was decided in Bharti Airtel Ltd as being the determinant of entitlement of 'input service' used for providing an 'output service' owing to break in the CENVAT chain that the referral bench alluded to. 16. In handing down the decision in Bharti Airtel Ltd, the Hon'ble High Court had two appeals before it - one pertaining to October 2004 to September 2005 and the other, on conclusion of first adjudication on 19th December 2006, pertaining to three notices for October 2005 to March 2008 -....
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....ice' by the assessee. Here the adjudicating authority held, too, that the fixing of assembled 'tower parts' and 'prefab shelters' to the ground cloaked those with the characteristic of immovable property for exclusion as 'goods' for the purpose of CENVAT credit scheme. 18. In disposing off the two appeals, against the separate upholding of both by the Tribunal, together, the Hon'ble High Court framed three issues, arising from submissions made on behalf the assessee to counter the upheld findings, for determination. These were: that the assembled 'tower parts' and 'prefab shelters' were not immovable property, that the assembled 'tower parts' and 'prefab shelters', of their own and owing to deployment with equipment required for rendering 'telecommunication service', are 'capital goods', and that these are 'components and parts' of goods enumerated as tariff items in the definition. That the elaborate findings which disallowed entitlement to credit of duty paid on 'inputs' deployed in connection with 'immovable property' which 'telecommunication equipment' - eligible for credit as 'capital goods' - were mounted on or housed in for convenience and protection was not intended for ....
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....responding to the reference before us. 21. The Larger Bench of the Tribunal in Reliance Industries Ltd has held that '35. The following two principles from the aforesaid two judgments of the Bombay High Court would be of relevance to the present dispute : (a) The definition of "input service" is of wide import and covers not only input services which have a nexus with the manufacture of the final product (covered by the first limb), but also other input services, which do not have such a nexus, and are covered by the other limbs of the definition. Each limb of the definition is independent and, therefore, if an assessee can satisfy any one of the limbs, the benefit of Cenvat credit would be available, even if the assessee does not satisfy the other limbs of the definition; and (b) Insofar as the first limb is concerned, the requirement of establishing a nexus between the input service and the process of manufacture is to be regarded as 'satisfied' if the expenditure incurred for the input service forms part of the cost of production/value of the final product, on which duty of excise is levied.' and sets forth the latitude obtained insofar as compar....
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....ly means services used directly or indirectly in or in relation to manufacture of final products, but also includes services used in relation to the business of manufacturing the final products. Therefore, while interpreting the words used in the definition of 'input service', the ratio laid down by the Apex Court in the context of the definition of 'input' alone would apply and not the judgment in its entirety. In other words, by applying the ratio laid down by the Apex Court in the case of Maruti Suzuki Ltd. (supra), it cannot be said that the definition of 'input service' is restricted to the services used in relation to the manufacture of final products, because the definition of 'input service' is wider than the definition of 'input'. 34. Therefore, the definition of input service read as a whole makes it clear that the said definition not only covers services, which are used directly or indirectly in or in relation to the manufacture of final product, but also includes other services, which have direct nexus or which are integrally connected with the business of manufacturing the final product. In the facts of the present case, use of the outdoor catering services is....
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....t same effect is evident in Wipro Ltd by a Larger Bench of the Tribunal holding that '7.1 Further, we find that there is no dispute about the fact that all these disputes relates to post 2011. The period involved in the present appeals is admittedly after 2011 and the amendment to the provisions of Rule 2(l) defining the 'input service' came into effect from 1-4-2011 only. The definition of 'input service' post amendment contains exclusion clause. The exclusion clause was effective from 1-4-2011 and clause (C) of the said exclusion specifically exclude the services provided in relation to "outdoor catering service" . Admittedly, such services prior to 1-4-2011 have been held to be covered by the definition of 'input service'. In fact, the need for exclusion would arise only when the services are otherwise covered by the definition. The Legislature in its wisdom has excluded certain services from the availment of Cenvat credit w.e.f. 1-4-2011, when such services are otherwise covered by the main definition clause of the 'input service'. To interpret, the said input clause, in such manner so as to hold that such services have direct or indirect nexus with the assessee's busi....
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....t into two parts terming them the 'mean' part and the 'includes' part and that the present case would fall under both the parts of the definition as the phraseology is wide enough to cover the said services, the same being directly or indirectly or in any event in relation to the manufacture of the respondents' final product. 8. The land was taken on lease to construct the factory. The factory was constructed to manufacture the final product. The land and the factory were required directly and in any event indirectly in or in relation to the manufacture of the final product and for the clearance thereof up to the place of removal. But for the factory the final product could not have been manufactured and the factory needed to be constructed on land. The land and the factory are used by the manufacturer in any event indirectly in or in relation to the manufacture of the final product, namely, metal-sheets. The respondents' case, therefore, falls within the first part of Rule 2(l) aptly referred to by Mr. Amrinder Singh as the "means part." 9. The respondents' case also falls within the second part of Rule 2(l) i.e. the "inclusive" part. The definition of the words ....
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....11. If in fact the said services were not covered by Rule 2(l), it would not have been necessary to introduce the amendment. It is clear, therefore, that prior to the amendment the setting up of a factory premises of a provider for output service relating to such a factory fell within the definition of 'input service.' The amendment of 2011 is not retrospective and is not applicable to the respondents' case.' in Bellsonica Auto Components India P Ltd and attained finality as enunciated in '13. At this stage Mr. Amrinder Singh, Advocate for the respondent brings to our notice that an information had been sought from the appellant-department under the Right to Information Act and by way of response it had been informed that the decision in Bellsonica Auto Components India P. Ltd. (supra) had been accepted by the department. Such factual premise is not disputed by Mr. Tajender K. Joshi, Advocate for the appellant.' of DLF Ltd. 24. It, therefore, emerges that 'input' and 'input services' stand in their respective, and mutually exclusive, contexts for the purpose of CENVAT Credit Rules, 2004. The wide latitude of 'input service', even in the post-2011 situation, permit....