2013 (12) TMI 563 - AT - Service Tax

CENVAT Credit on Input Services - CENVAT credit was denied - Whether the appellant would be eligible for Cenvat credit in respect of components of towers used by them for erection and installation of towers on which antenna is mounted and also in respect of input services used for erection and installation of towers and their repair and maintenance - Held that - Neither the towers on which the antenna was mounted are eligible for Cenvat credit nor the services availed for erection and installation of towers and for their maintenance and repairs are eligible for Cenvat credit, that the towers were neither covered by the definition of inputs nor the same are covered by the definition of capital goods, that the towers being structures fixed to the earth are not even goods Following Bharti Airtel Ltd. vs. CCE, Bangalore 2012 (7) TMI 233 - CESTAT, BANGALORE - towers or their components on which the antenna was mounted were neither the component of antenna and have capital goods nor the same were covered by the definition of inputs and hence would not be eligible for Cenvat credit. - stay granted partly.

Summary

Issues:
Denial of Cenvat credit on towers and shelters, DG sets, PIU, SMPS, and battery; Eligibility of towers as capital goods; Eligibility of services for erection, installation, and maintenance of towers for Cenvat credit.

Analysis:
The appellant, a provider of various services, availed Cenvat credit on service tax paid on input services and Central Excise duty paid on inputs and capital goods as per Cenvat credit Rules, 2004. The Department issued a show cause notice denying the Cenvat credit on towers, shelters, DG sets, PIU, SMPS, and battery, stating they do not qualify as capital goods or inputs. The Commissioner confirmed the demand, imposing penalties under the Finance Act. The appellant appealed against this decision. The main issue was the eligibility of towers and services related to them for Cenvat credit.

During the hearing, the appellant argued that towers should be considered components of antennas for microwave transmission and thus eligible for Cenvat credit. They contended that the services for installation, erection, repair, and maintenance of towers should also qualify as input services. However, the Department opposed this, citing precedents where towers were deemed ineligible for Cenvat credit. The Tribunal noted that previous judgments had ruled against considering towers or their components as capital goods or inputs, making them ineligible for Cenvat credit. As a result, the services related to towers were also deemed ineligible for Cenvat credit.

Ultimately, the Tribunal found that the appellant failed to establish a prima facie case in their favor. They directed the appellant to deposit a specified amount within a set timeframe. Upon compliance, the requirement for pre-deposit of the remaining amount of Cenvat credit demand, interest, and penalty would be waived, and recovery stayed pending the appeal's disposal. The appellant was given a deadline for compliance, emphasizing the need for the specified deposit to proceed with the appeal process.