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2015 (2) TMI 1297 - AT - Service TaxCENVAT Credit - capital goods/inputs - towers towers parts cabin cabin parts medi-claim services and goods other than towers pre-fabricated buildings and shelters - period involved in these appeals is 2005 to 2006 and 2007 to 2008 - time limitation - Held that - The rules do provide for availment of Cenvat credit on capital goods as well as inputs - In the cases in hand we find that the towers and shelters which were received by the appellants at site were not capital goods in the form as they were received inasmuch as they were covered under Chapter 73 the pre-fabricated shelters were covered under Chapter No. 94. The definition of capital goods do not include these two chapters in the scope for the eligibility to avail Cenvat credit. The ratio of the decision of the Hon ble High Court of Bombay in the case of Bharti Airtel Ltd. 2014 (9) TMI 38 - BOMBAY HIGH COURT as regards the eligibility to avail Cenvat credit would be directly applicable in all these cases - Their Lordships after considering all the detailed submissions made by the counsel before them and considering various case laws came to a conclusion that Cenvat credit cannot be availed by the appellant therein either under the category of capital goods or inputs on the towers or pre-fabricated buildings - the issue is now squarely covered by the decision of the jurisdictional High Court which is binding on us and is in favour of Revenue. The confirmation of demand of ineligible Cenvat credit and interest thereof on towers and pre-fabricated buildings within the limitation period are upheld in respect of all the appellants. Extended period of limitation - Held that - The issue of availment of Cenvat credit on the towers and pre-fabricated buildings and shelters was being disputed before the various forum and hence all the appellants could have entertained a bonafide belief that they were eligible to avail Cenvat credit of duty paid on towers and pre-fabricated buildings/shelters - extended period of limitation should not be invoked - Demand of ineligible Cenvat credit which is confirmed along with interest by invoking extended period is set aside in respect of all the appellants. Penalty - Held that - As the issue was of are interpretative nature i.e. as to eligibility of Cenvat credit or otherwise on the towers and the building and had to be settled in the hands of the Hon ble High Court the appellants could have entertained a bonafide belief. Hence all the penalties imposed on all the appellants herein are set aside by invoking the provisions of Section 80 of the Finance Act 1994. Appeal disposed off.
Issues Involved:
1. Eligibility of Cenvat credit on towers and pre-fabricated buildings/shelters. 2. Invocation of the extended period for demand of tax. 3. Imposition of penalties. Detailed Analysis: Issue 1: Eligibility of Cenvat Credit on Towers and Pre-fabricated Buildings/Shelters The appellants, including M/s. Tata Teleservices Ltd. (TTL), M/s. Vodafone India Ltd. (VIL), and others, contested the denial of Cenvat credit on towers and shelters, arguing that these items are goods used for providing output services. They relied on the definitions of capital goods and inputs under the Cenvat Credit Rules, 2004 (CCR). The appellants argued that towers and shelters are essential for providing telecom services and infrastructure services, which are taxable under business auxiliary service and business support service categories. They submitted expert opinions and photographs to support their claims. The Tribunal, however, found that towers and shelters, classified under Chapters 73 and 94 respectively, do not fall within the definition of capital goods under Rule 2(a) of CCR. Moreover, the Tribunal noted that the appellants failed to establish a direct link between these items and the provision of output services. The Tribunal relied on the decision of the Hon'ble High Court of Bombay in Bharti Airtel Ltd., which held that towers and pre-fabricated buildings are immovable properties and thus ineligible for Cenvat credit under both capital goods and inputs categories. The Tribunal also rejected the argument that towers and shelters remain movable despite being dismantled and relocated. The Tribunal emphasized that the immovable nature of these items, once erected, remains unchanged. The Tribunal further distinguished the cases cited by the appellants, noting that they involved different factual scenarios and services. Issue 2: Invocation of the Extended Period for Demand of TaxThe appellants challenged the invocation of the extended period for demanding Cenvat credit, arguing that they had disclosed all relevant information in their returns and audits. They contended that the issue was one of interpretation and not suppression of facts. The Tribunal agreed with the appellants, noting that audits had taken place, and the issue was being contested before various forums. The Tribunal found that the appellants had a bona fide belief in their eligibility for Cenvat credit and had disclosed all necessary information in their returns. Therefore, the Tribunal held that the extended period could not be invoked. Issue 3: Imposition of PenaltiesThe Tribunal set aside all penalties imposed on the appellants, invoking the provisions of Section 80 of the Finance Act, 1994. The Tribunal reasoned that the issue was interpretative in nature and involved a bona fide belief on the part of the appellants regarding their eligibility for Cenvat credit. Consequently, the penalties were deemed unsustainable. Conclusion:1. The confirmation of demand of ineligible Cenvat credit and interest for the period within the limitation is upheld for all appellants. The appeals are disposed of accordingly.
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