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2015 (3) TMI 701 - AT - Service TaxAvailment and utilization of CENVAT Credit - Capital goods - Business Support Service - Held that - There is no denying the fact that the resultant output service provided by them is Passive Telecom Infrastructure i.e. Business Support Service. Therefore, there is direct nexus of the output services and the credit taken on the goods procured such as steel, racks, bolts etc. which are excisable and were cleared under Central Excise invoices showing payment of Central Excise duty. The payment of Central Excise duty on these goods and their assessment has not been questioned at the end of the supplier. Without use of these duty paid towers/parts as inputs, the Business Support Service in the firm of Passive Telecom Infrastructure could not have been provided. The appellant availed credit under Rule 3(1)(i) which allows Cenvat credit on any inputs or capital goods received by the provider of output service. The appellant received inputs such as structural steel for providing Passive Telecom Infrastructure . Merely because the tower parts etc. are assembled together, it would be totally unreasonable to suggest that Cenvat Credit on them is not admissible despite Rule 2(k)(ii). This Rule has to be interpreted as it stands. Reliance is placed on the High Court of HP judgment in the case of Gujarat Ambuja Cement 2008 (6) TMI 213 - HIGH COURT OF HIMACHAL PRADESH AT SHIMLA and the Tribunal decision in the case of Commissioner of Central Excise Raigad vs. JSW Ispat Steel Ltd. 2013 (11) TMI 1389 - CESTAT MUMBAI in which it was held that excise duty paid on parts of components would be admissible even if they are assembled into goods which are immovable or exempted. - appellant is entitled to Cenvat Credit. In turn, the question of penalties does not arise.- Impugned order is set aside - Decided in favour of assessee.
Issues Involved:
1. Wrongful availing and utilization of CENVAT credit on goods claimed as "Capital Goods." 2. Eligibility of CENVAT credit on parts used in the erection/fabrication of Telecom Towers. 3. Classification of Telecom Towers as immovable property and its implications on CENVAT credit. 4. Distinction between input goods and capital goods under the CENVAT Credit Rules, 2004. 5. Applicability of precedents and judicial interpretations in similar cases. Issue-wise Detailed Analysis: 1. Wrongful Availing and Utilization of CENVAT Credit on Goods Claimed as "Capital Goods": The appellant was found to have wrongly availed and utilized CENVAT credit on goods such as Bracket, Mounting Pole, Mount Clamps, Cable, Pre-fabricated Buildings/Shelter/Panel, etc., claiming them to be "Capital Goods." These goods were used in the erection/fabrication of Telecom Towers. The Revenue contended that these goods did not fall under the definition of "Capital Goods" as per Rule 2(a)(A)(i) of the CENVAT Credit Rules, 2004 (CCR), and thus, the appellant was not eligible for CENVAT credit on these items. 2. Eligibility of CENVAT Credit on Parts Used in the Erection/Fabrication of Telecom Towers: The Tribunal referred to the judgment in the case of GTL Infrastructure Ltd., where it was held that CENVAT credit is allowed on items such as Cement, Tower parts, Structural steel used in providing the service of 'Passive Telecom Infrastructure' under the category of Business Auxiliary Service per Rule 2(k)(ii) of the CENVAT Credit Rules. The appellant argued that their case was identical to GTL's case, except that their output service was Business Support Service (BSS) instead of Business Auxiliary Service (BAS). 3. Classification of Telecom Towers as Immovable Property and Its Implications on CENVAT Credit: The Revenue argued, relying on the Bombay High Court judgment in Bharti Airtel Ltd. vs. Commissioner of Central Excise, Pune-III, that CENVAT credit on parts of Telecom Towers cannot be allowed as these towers, once erected, become immovable property and hence cannot be termed as 'goods.' The High Court had held that towers and parts thereof, being immovable, were not eligible for CENVAT credit as capital goods or inputs. 4. Distinction Between Input Goods and Capital Goods Under the CENVAT Credit Rules, 2004: The Tribunal noted that the appellant was not seeking input credit under Rule 2(a)(A) for capital goods but under Rule 2(k)(ii) for inputs used in providing output service. The Tribunal emphasized that Rule 2(k)(ii) allows CENVAT credit on all goods used for providing any output service, except for light diesel oil, high-speed diesel oil, motor spirit, and motor vehicles. The Tribunal found that the goods in question were used for providing Business Support Service and thus qualified as inputs under Rule 2(k)(ii). 5. Applicability of Precedents and Judicial Interpretations in Similar Cases: The Tribunal distinguished the present case from Bharti Airtel Ltd. by noting that the output service in the present case was Business Support Service, not Telecommunication Service. The Tribunal also referred to the judgment in Sai Sahmita Storages Pvt. Ltd., where CENVAT credit was allowed on inputs used for providing storage and warehousing services. The Tribunal found the facts of the present case similar to Sai Sahmita and held that credit on inputs such as steel, structural, racks, etc., used for providing Business Support Service was admissible. Conclusion: The Tribunal concluded that the appellant was entitled to CENVAT credit on the goods used for providing Business Support Service under Rule 2(k)(ii) of the CENVAT Credit Rules, 2004. The impugned orders disallowing the credit and imposing penalties were set aside, and the appeal was allowed.
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