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2022 (4) TMI 1361 - AT - Service TaxCENVAT Credit - inputs and/or capital goods - towers - doors - racks - fall arrestor system - insulation material etc. - telecommunication services is provided by the appellant - period from March 2014 to June 2017 - refund of CENVAT credit, which was reversed under protest on 29.06.2017 21.09.2017 and 14.10.2017, without there being either a determination on the issue of eligibility to avail CENVAT credit or issue of a show cause notice - whether towers are movable property or immovable property? - HELD THAT - The expression movable property has been defined in section 3(36) of the General Clauses Act, 1897 to mean property of every description, except immovable property. Section 3 of the Transfer of Property Act, 1882, provides that unless there is something repugnant in the subject or context, immovable property would not include standing timber, growing crops or grass. Section 3(26)of the General Clauses Act, 1897, provides that immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. The permanency test was examined at length by the Supreme Court in COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD VERSUS SOLID CORRECT ENGINEERING WORKS ORS. 2010 (4) TMI 15 - SUPREME COURT . In this case the Supreme Court drew a distinction between machines which by their very nature are intended to be fixed permanently to the structures embedded in the earth and those machines which are fixed by nuts and bolts to a foundation not because the intention was to permanently attach it to the earth but because foundation was necessary to provide a wobble free operation to the machine. The appellant had repeatedly emphasized that the towers of the appellant were neither embedded nor permanently fixed or fastened to the earth/foundation and in fact, were merely attached to the foundation above the ground using nuts and bolts so that no damage was caused to any part of the tower on re-location. The show cause notice does not dispute that the towers were fastened on a foundation above the ground using nuts and bolts, nor does the order passed by the Assistant Commissioner or the Commissioner (Appeals) dispute this factual position. There is neither any allegation nor finding that the towers of the appellant are embedded in the earth. In fact, the towers of the appellant are erected above the ground on a foundation using nuts and bolts. This aspect is crucial for deciding whether the telecom towers are immovable property or moveable property as was observed by the Supreme Court in Solid and Correct Engineering Works - The towers are neither land nor benefits arising out of land nor are the same attached to the earth or permanently fastened to anything attached to earth. The towers are merely fastened above the ground to a foundation using nuts and bolts. The fastening is, therefore, not permanent, since the towers can be easily unfastened and in fact, according to the appellant, have been moved on a number of occasions without any damage from one location to another. It is seen that CENVAT credit was reversed by the appellant under protest without there being determination of the liability. After the credit was reversed, the appellant was advised that such a reversal was not warranted. It accordingly, applied for refund of the credit reversed by it which was a method by which such a credit that had been reversed could have been restored. This is what was observed by the Tribunal in USHA INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS (I) , MUMBAI 2017 (2) TMI 239 - CESTAT MUMBAI . The Tribunal held that where an assessee has reversed credit under protest, without there being any determination, such an assessee can seek restoration of such reversal by filing a claim for refund and it is impermissible for the authorities dealing with the refund claim to reject the same as being premature. The inevitable conclusion is that the appellant was justified in availing CENVAT credit of central excise duty, as inputs , on items indicated in Part-I of the chart contained in the paragraph 43 of this decision and as capital goods on the items contained in Part-II of the said chart. The appellant would, therefore, be entitled to refund of the said CENVAT credit which was reversed by it under protest . Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the appellant is justified in availing CENVAT credit of central excise duty paid on towers, doors, racks, fall arrestor system, insulation material, etc., as inputs and/or capital goods. 2. Whether the appellant is entitled to refund of the said CENVAT credit which was reversed under protest without a determination on the issue of eligibility to avail CENVAT credit or issuance of a show cause notice. Detailed Analysis: Issue 1: Justification for Availing CENVAT Credit The appellant, a telecom operator, installed various monopoles, masts, poles, and telecom towers for providing LTE 4G wireless telecommunications services. The dispute centers on whether these items qualify as inputs or capital goods under the CENVAT Credit Rules, 2004. - Nature of Towers: The appellant's towers are fastened above the ground using nuts and bolts and are movable, unlike the traditional 2G/3G towers embedded in the earth. The department's audit objected to the credit availed on these towers, leading to the appellant reversing the credit under protest. - Department's Stand: The department issued a show cause notice alleging that the towers were immovable structures and thus not eligible for CENVAT credit, relying on the Bombay High Court judgments in Bharti Airtel and Vodafone India. - Appellant's Defense: The appellant argued that their towers are not permanently fastened or embedded in the earth and can be relocated without damage. They cited the Delhi High Court's judgment in Vodafone Mobile Services, which held that towers fastened with nuts and bolts are not immovable property. - Legal Precedents: The Supreme Court in Solid & Correct Engineering Works and Triveni Engineering & Indus. Ltd. emphasized the test of permanency, stating that machinery bolted for stability does not become immovable property. The Delhi High Court in Vodafone Mobile Services ruled that towers fastened for stability are not immovable. - Conclusion: The tribunal concluded that the appellant's towers, being fastened with nuts and bolts and movable, do not qualify as immovable property. Therefore, the appellant is justified in availing CENVAT credit on these items as inputs and capital goods. Issue 2: Entitlement to Refund of Reversed CENVAT Credit The appellant reversed the CENVAT credit under protest and later sought a refund, arguing that the reversal was unwarranted without a show cause notice or determination of liability. - Department's Argument: The department contended that the refund claim was premature as the show cause notice issued under rule 14 of the 2004 Rules had not been adjudicated. - Appellant's Position: The appellant argued that the reversal was made under protest and that they were advised that such a reversal was not warranted. They cited the Tribunal's decision in Usha International, which held that an assessee can seek restoration of reversed credit by filing a refund claim. - Legal Precedents: The Tribunal in Usha International and the Punjab & Haryana High Court in Century Metal Re-cycling ruled that amounts deposited during investigations must be refunded unless there is an assessment and demand. - Conclusion: The tribunal held that the appellant is entitled to a refund of the reversed CENVAT credit, as there was no determination of liability. The refund claim cannot be rejected as premature. Final Judgment: The tribunal set aside the impugned order dated 30.08.2019 and allowed the appeal, granting the appellant consequential relief, including the refund of the reversed CENVAT credit.
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