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2021 (10) TMI 186 - AT - Service TaxCENVAT Credit - capital goods - input services - fabrication, erection, installation of towers and shelters - extended period of limitation - penalty - HELD THAT - The issue relating to the admissibility of credit of inputs/capital goods and services used in the fabrication, erection and installation of towers and shelters has been long in dispute. Bombay High Court in the case of M/S. BHARTI AIRTEL LTD. (EARLIER KNOWN AS BHARTI TELE-VENTURES LTD.) VERSUS THE COMMISSIONER OF CENTRAL EXCISE 2014 (9) TMI 38 - BOMBAY HIGH COURT , VODAFONE INDIA LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, MUMBAI II 2015 (9) TMI 583 - BOMBAY HIGH COURT held that to produce telecommunication service, cenvat credit on towers, prefabricated shelters and their accessories cannot be availed as the towers are fixed to the earth and became immovable property and ipso facto, non-marketable and non-excisable. Delhi High Court in the case of VODAFONE MOBILE SERVICES LIMITED, INDUS TOWERS LIMITED, TOWER VISION INDIA PRIVATE LIMITED, BHARTI INFRATEL LIMITED, VERSUS COMMISSIONER OF SERVICE TAX, DELHI 2018 (11) TMI 713 - DELHI HIGH COURT ., VODAFONE MOBILE SERVICES LIMITED, INDUS TOWERS LIMITED, TOWER VISION INDIA PRIVATE LIMITED, BHARTI INFRATEL LIMITED, VERSUS COMMISSIONER OF SERVICE TAX, DELHI 2018 (11) TMI 713 - DELHI HIGH COURT , Delhi High Court have taken a contrary view after examining and distinguishing the judgment of Bombay High Court - the credit, of inputs / capital goods and services utilized in fabrication, erection, installation of towers and shelters by the appellants, is admissible to them. Credit of various services availed by the providers of telecom service - HELD THAT - The credit taken and availed by the appellants on all the impugned services except the service relating to dismantling of towers (in respect of show cause notice dated 13.10.2011) is admissible to them - the appellants have not submitted any suitable reason to consider that the said service is required and the same is in the furtherance of their business - credit availed on service relating to dismantling of towers is not admissible to them. Validity of SCN - HELD THAT - It is not understood as to how the learned Commissioner has come to the conclusion on the credit availed by the appellants in respect of each of the services. Understandably, the onus of identifying the service and the credit irregularly availed, if any, by the appellants is squarely on the department. So, it is very difficult to uphold show cause notices and orders issued without clarity of either allegation or confirmation. Time limitation - HELD THAT - In addition to the fact that the appellants are regular assessees who have been filing ST-3 Returns, the appellants have been issued show cause notices dated 22.09.2009 and 08.10.2010. This being the case, it is not possible to invoke extended period by alleging suppression of fact with an intent to evade payment of duty in respect of show cause notices dated 14.10.2010 and 13.10.2011 - it is not possible for this Bench to hold that the department is free to invoke extended period in the subsequent show cause notices - the credit is admissible to the appellants and as such the appeal survives on merits and any findings on limitation etc. would be redundant. The impugned order is set aside, except to the extent of confirmation of credit availed on services relating to dismantling of towers for the normal period - appeal allowed in part.
Issues Involved:
1. Admissibility of credit on inputs and capital goods/services used in the fabrication, erection, installation of towers and shelters. 2. Admissibility of credit on various services disputed in the show cause notices. 3. Invocation of extended period in respect of show cause notices dated 14.10.2010 and 13.10.2011. 4. Justification of imposition of penalty. Detailed Analysis: 1. Admissibility of Credit on Inputs and Capital Goods/Services Used in Fabrication, Erection, Installation of Towers and Shelters: The appellants contested the denial of CENVAT credit on capital goods and input services used in the fabrication, erection, and commissioning of towers and shelters. The Tribunal referenced the Delhi High Court's decision in Vodafone Mobile Services Ltd. vs. CST, which disagreed with the Bombay High Court's ruling in BhartiAirtel Ltd. vs. CCE. The Delhi High Court held that towers and shelters used for telecommunication services are not immovable properties and qualify as "capital goods" or "inputs" under the CENVAT Credit Rules. The Tribunal found that the towers and shelters are essential components for providing telecommunication services and thus eligible for CENVAT credit. 2. Admissibility of Credit on Various Services Disputed in the Show Cause Notices: The Tribunal examined the eligibility of CENVAT credit on various input services such as civil construction, electrical work, erection, installation, freight, collection charges, cleaning, insurance, rent, and manpower. The Tribunal referenced its previous decisions, including the Final Order No. 42376/2018, which allowed credit on similar services. The Tribunal held that the services availed by the appellants are directly related to their business operations and are therefore eligible for CENVAT credit, except for the service relating to the dismantling of towers. 3. Invocation of Extended Period in Respect of Show Cause Notices Dated 14.10.2010 and 13.10.2011: The Tribunal found that the show cause notice dated 14.10.2010 was vague and lacked specific service-wise breakups of the disputed credit amounts. The Tribunal emphasized that the onus of identifying the service and the irregularly availed credit lies with the department. The Tribunal also noted that the appellants had been regularly filing ST-3 returns and had already been issued previous show cause notices. Citing precedents such as Hyderabad Polymers (P) Ltd. vs. CCE and Nizam Sugar Factory vs. CCE, the Tribunal held that the extended period could not be invoked in the subsequent show cause notices. 4. Justification of Imposition of Penalty: Given that the Tribunal found the appellants' claims on merits, it concluded that the imposition of penalties was not justified. The Tribunal noted that the credit availed by the appellants was in compliance with the law and under a bona fide belief of eligibility. The Tribunal set aside the impugned order except for the credit availed on services relating to the dismantling of towers for the normal period. Conclusion: The Tribunal allowed the appeal, setting aside the impugned order except for the credit availed on the dismantling of towers, and held that the appellants were entitled to CENVAT credit on the disputed inputs, capital goods, and services. The Tribunal also ruled that the extended period could not be invoked in the subsequent show cause notices, and the imposition of penalties was not justified.
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