2019 (5) TMI 1988 - AT - Service Tax

CENVAT Credit - inputs - tower and shelter - input services used for providing telecommunication services/passive infrastructure - HELD THAT - The issue has been settled by this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX-GURGAON VERSUS BHARTI INFRATEL LIMITED 2019 (2) TMI 1736 - CESTAT CHANDIGARH , wherein this Tribunal has held that The assessee-appellant are entitled to avail cenvat credit on items, towers, shelter parts thereof being input used for providing output service. The impugned orders set aside and the credit availed by the appellants are allowed - appeal allowed.

Summary

Issues:
Entitlement to avail credit on tower and shelter under Rule 2(k) of Cenvat Credit Rules, 2004 and entitlement to avail credit on input service used for providing telecommunication services/passive infrastructure under Rule 2(l) of Cenvat Credit Rules, 2004.

Analysis:
The primary issue in this case revolves around the entitlement of the appellants to claim credit on tower and shelter under Rule 2(k) of the Cenvat Credit Rules, 2004, and on input services used for providing telecommunication services/passive infrastructure under Rule 2(l) of the same rules. The Tribunal examined whether the towers and shelters could be considered as inputs and if the appellants were eligible to avail credit on them.

Upon reviewing the submissions from both parties, the Tribunal referred to a previous decision in the case of M/s. Bharati Infratel Limited, where it was established that towers and shelters, being integral parts of the active infrastructure for telecommunication services, qualified as inputs. The Tribunal highlighted that the towers and shelters were not permanently attached to the earth and could be moved without damage, emphasizing their functional utility in providing cellular connectivity.

The Tribunal further emphasized that the eligibility to claim credit on inputs should be determined at the time of receipt of goods, as per Rule 4(1) of the Credit Rules. It was noted that the definition of "inputs" did not contain any condition regarding the emergence of immovable property to disqualify the credit claim. Additionally, the Tribunal clarified that even if the towers became immovable property at a later stage, it did not affect the appellants' eligibility to avail credit.

Based on the precedent set in the case of M/s. Bharati Infratel Limited and the interpretation of relevant rules, the Tribunal concluded that the appellants were indeed entitled to avail Cenvat credit on towers, shelter parts, and input services used for providing output services. Consequently, the impugned orders were set aside, and the credit availed by the appellants was allowed. The appeals were thus allowed with any consequential relief that may arise from the decision.

In conclusion, the judgment reaffirmed the eligibility of the appellants to claim credit on towers, shelter parts, and input services under the Cenvat Credit Rules, 2004, based on the functional utility and integration of these components in providing telecommunication services and passive infrastructure.