2018 (9) TMI 126 - AT - Central Excise

CENVAT Credit - transportation of towers to the site - Revenue is of the view that as these towers and shelters are immovable property, therefore, the appellant is not entitled to avail Cenvat credit on transportation of towers to the site as well as towers and shelters - Extended Period of Limitation - the period for input service is 2006-07 to 2007-08 i.e. the entire period is prior to 1.4.2011 - Difference of Opinion. Held that - The settled position in law is that the input service or the activity used should be integrally connected with the business of the appellant and should not be in the nature of welfare activity. On this basis, the services like renting a cab, outdoor catering and other services, which are used for carrying on the business of manufacturing or providing output services have been held to be admissible services in numerous judicial pronouncements - On the same basis, transportation of towers is an activity related to the business. Even though the towers are not eligible for Cenvat credit as inputs or capital goods, they are essential for providing telecommunication service - input service credit on transportation of towers to the site is admissible to the appellant Appeal disposed off.

Summary

Issues:
1. Availment of Cenvat credit on towers and shelters.
2. Availment of Cenvat credit on transportation of towers as input service.

Issue 1: Availment of Cenvat credit on towers and shelters:

The appellant, engaged in providing telecommunication services, faced a challenge regarding the eligibility to avail Cenvat credit on towers and shelters as immovable property. The Revenue contended that as these assets were immovable, the appellant could not claim credit on their transportation to the site. The proceedings initiated against the appellant led to the denial of the credit. The appellant argued that the demand for the extended period of limitation was not sustainable, citing precedents supporting their position. The Tribunal noted that while towers and shelters were considered immovable property, the demand for the extended period was not sustainable, and no penalty was imposable on the appellant based on relevant case law.

Issue 2: Availment of Cenvat credit on transportation of towers as input service:

The debate on whether the appellant could avail Cenvat credit on transportation of towers to the site as an input service was a focal point. The appellant's counsel relied on a Tribunal decision emphasizing the necessity of towers for providing telecommunication services, arguing that without transporting towers to the site, the service provision would be hindered. The Tribunal referred to previous cases to support the appellant's claim, highlighting the essential nature of towers in providing telecommunication services. The Tribunal concluded that the appellant, engaged in providing telecommunication services, was entitled to Cenvat credit on the transportation of towers as an input service crucial for their business operations.

In conclusion, the judgment by the Appellate Tribunal CESTAT CHANDIGARH addressed the issues of Cenvat credit availment on towers and shelters, as well as on the transportation of towers as an input service for providing telecommunication services. The decision provided clarity on the eligibility of the appellant to claim such credits based on the nature of the assets involved and their significance in the appellant's business operations.