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TMI Blog2015 (3) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... r parts etc. are assembled together, it would be totally unreasonable to suggest that Cenvat Credit on them is not admissible despite Rule 2(k)(ii). This Rule has to be interpreted as it stands. Reliance is placed on the High Court of HP judgment in the case of Gujarat Ambuja Cement [2008 (6) TMI 213 - HIGH COURT OF HIMACHAL PRADESH AT SHIMLA] and the Tribunal decision in the case of Commissioner of Central Excise Raigad vs. JSW Ispat Steel Ltd. [2013 (11) TMI 1389 - CESTAT MUMBAI] in which it was held that excise duty paid on parts of components would be admissible even if they are assembled into goods which are immovable or exempted. - appellant is entitled to Cenvat Credit. In turn, the question of penalties does not arise.- Impugned order is set aside - Decided in favour of assessee. - Appeal No. ST/88497, 85862/2014-Mum - Final Order Nos. A/382-383/2015-WZB/STB - Dated:- 26-11-2014 - Anil Choudhary And P. S. Pruthi,JJ. For the Appellants : Shri V S Nankani, Sr. Adv. Shri Gopal Mundhra, CA Shri Abhishek Jaju, CA For the Respondent : Shri Devendra Nagvenkar, Additional Commissioner (AR) ORDER Per: P S Pruthi: The appellant are in appeal against Order- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Rule 14 of the CCR read with Section 75 of the Finance Act and penalties imposed under Sections 77 of the Act and Rule 15 of the CCR read with Section 78 of the Act. 3. Heard both sides. 4. The Ld. Counsel for the appellant referred to the judgment of the Tribunal in the case of GTL Infrastructure Ltd. Appeal No. ST/89464/2013-Mum. in which it was held that Cenvat Credit is allowed on various items such as Cement, Tower parts, Structural steel etc. used in providing service of 'Passive Telecom Infrastructure' under the category of Business Auxiliary Service in terms of Rule 2 (k) (ii) of the Cenvat Credit Rules. According to him, the present case is identical in facts to the case of GTL except that in the case of GTL the output service is BAS i.e. Business Auxiliary Service whereas in their case it is BSS i.e. Business Support Service. 4.1. The Ld. Counsel also referred to the Bombay High Court judgment in the case of M/s. Bharti Airtel Ltd. Vs. Commissioner of Central Excise, Pune-III - 2014 (35) S.T.R. 865 (Bom.) in which the Hon'ble High Court held that Cenvat Credit on parts of Tower cannot be allowed either as capital goods specified in Rule 2(a) (A) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhra Pradesh High Court in the case of Sai Sahmita Storages Pvt. Ltd. Vs. Commissioner of Central Excise 2011 (270) E.L.T. 33 (A. P.). In the case of Bharti Airtel Ltd. (supra) Hon'ble Mumbai High Court distinguished the judgment of Sai Sahmita Storages (P) Ltd. holding that the reliance on this judgment may not be helpful to the appellants inasmuch as the definition of storage and warehousing as contained in Section 65(102) of the Finance Act itself stand on a different footing. In that context the Division Bench of Andhra Pradesh High Court has held that use of cement and TMT bars by the assessee for providing storage facility has become integral part of storage and warehousing and without the use of cement and TMT bars, storage and housing could not have been provided. However, in the present case the facts are distinct. The towers are admittedly immovable structures and non marketable and non excisable. We therefore, of the clear opinion that this judgment of the Division Bench of Andhra Pradesh High Court is inapplicable in the facts of the present case. According to Ld. Counsel, the facts of their case are similar to the case of Sai Sahmita Storages (P) Ltd. as they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Andhra Pradesh High Court in the case of Sai Sahmita Storages Ltd. Ld. (supra), Ld. A.R. said that it is open for the Tribunal to consider this decision per incuriam. Ld. AR also relied on the judgments in the case of City Reality Development Pvt. Ltd. vs. Commissioner of Central Excise, Pune-III Appeal ST/85609/14-Mum, in which appellants were directed to make pre-deposit on inputs and capital goods used in constructing a mall. He further placed reliance on the judgment of the Tribunal in case of Mundra Port Special Economic Zone Ltd. vs. CCE, Rajkot 2009 (13) STR 178 (Tri-Ahm.). 6. We have considered the submissions made by both sides. In an identical case of GTL Infrastructure Ltd. (supra), the Tribunal held that Cenvat Credit on steel and other items is admissible. Tribunal held that : To conclude the issue in hand, first we have to examine the provisions of Cenvat Credit Rules for availment of Cenvat Credit, as the appellant has contended that they are claiming that Cenvat Credit be allowed on the goods in question as inputs. Therefore, we are not discussing the issue whether the appellants are entitled to Cenvat Credit as capital goods. In these circumstances, we ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Cenvat Credit Rules, 2004 all goods are entitled for Cenvat Credit which are used for providing any output service. In this case nowhere it is disputed by any of the parties that the tower/BTS cabins were not used by the appellant for providing service namely 'Business Auxiliary Service'. Therefore, the Cenvat Credit cannot be denied. These facts have not been appreciated by the adjudicating authority and the adjudicating authority heavily relied on the definition of inputs as per Rule 2(k) (i) and Explanation-II to the said Rule. We also find that before discharging their service tax liability, the appellant narrated activity undertaken by them to the Revenue and Revenue directed the appellant to pay service tax under the category of 'Business Auxiliary Service' on the said activity. In that case the Cenvat Credit taken on the inputs for providing that service is entitled for Cenvat Credit as per Rule 2(k) (ii) of the Cenvat Credit Rules, 2004. Further, we find that the adjudicating authority has heavily relied upon the decision of Bharti Airtel Ltd. (supra); in the said case the facts are totally different to the facts of the case in hand. In fact in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular telephone services. The appellant, inter alia, availed CENVAT credit on excise duty paid on towers parts and shelters/prefabricated buildings purchased by them and alleged to be used for providing output service. The credit so availed was utilised for payment of service tax on output service viz. Cellular Mobile Service being provided by the appellant. Further the Hon'ble High Court at para 23 of the judgment outlined the issue which was examined by them- ................The position of the goods in question vis-a-vis the plain application of the rules is that the tower and parts thereof are fastened and are fixed to the earth and after their erection become immovable and therefore cannot be goods. Further in the CKD or SKD condition the tower and parts thereof would fall under the chapter heading 7308 of the Central Excise Tariff Act. Heading 7308 is not specified in clause (i) or clause (ii) of rule 2 (a) (A) of the Credit Rules so as to be capital goods. 7.2 From the above we find that the issue set by High Court for itself for examination was the admissibility of Cenvat Credit on towers parts for providing output service namely telecommunication service. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Rule 2(a)(A) of the Credit Rules show that all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading No.6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Central Excise Tariff Act; pollution control equipments; components, spares and accessories of the goods specified at sub clauses (i) and (ii) which are used either in the factory for manufacture of final products but does not include any equipment or appliance used in the office and those used for providing output service. Further in the CKD or SKD condition the tower and parts thereof would fall under the chapter heading 7308 of the Central Excise Tariff Act. Heading 7308 is not specified in clause (i) or clause (ii) of rule 2 (a)(A) of the Credit Rules so as to be capital goods. Further the Appellants contention that they were entitled for credit of the duty paid as the Base Transreceiver Station (BTS) is a single integrated system consisting of tower, GSM or Microwave Antennas, Prefabricated building, isolation transformers, electrical equipments, generator sets, feeder cables etc. and that these systems are to be treated as composite s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment, Hon'ble High Court said that in any case towers and PFB are in the nature of immovable goods and are non-marketable and non-excisable. If this be the position then towers and parts thereof cannot be classified as inputs so as to fall within the definition of Rule 2(k) of the credit rules. We clarify that we are not deciding any wider question but restricting our conclusion to the facts and circumstances which have fell for our consideration in these appeals. In view of the clear finding of the High Court it is necessary to see facts in the present case. The facts in the present case are essentially different. In the present case the output service is Business Support Service and not Telecommunication Service. The show cause notice itself states that appellant are paying service tax on Business Support Service. The appellant in the present case is also not in argument that telecom towers becomes part of antenna for providing output Telecommunication Service. In fact, Cenvat Credit on antennas is not claimed at all. The appellant is only providing Business Support Service in the form of 'Passive Telecom Infrastructure'. This Passive Telecom Infrastructure' en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Tubes (P) Ltd. vs. Collector of Central Excise 1995 (75) E.L.T. 17 (SC) in which it was held that Learned Counsel for the revenue urged that even if the goods were capable of being brought to the market it would attract levy. True, but erection and installation of a plant cannot be held to be excisable goods. If such wide meaning is assigned it would result in bringing in its ambit structures, erections and installations. That surely would not be in consonance with accepted meaning of excisable goods and its exigibility to duty. We note that in the present case the appellant is taking the plea that inputs are brought for providing Business Support Service. 8.3 Similar reliance was placed by the Government Counsel on various other decisions such as Commissioner of C. Ex. Mumbai vs. Hutchison Max Telecom P. LTd. 2008 (224) E.L.T. 191 (Bom.). We have taken the liberty of referring to the judgment in the case of Bharti Airtel Ltd. (supra) in some detail because we find that the whole case of Revenue in that case was based on the sole and most important contention that the towers are immoveable property and therefore cannot be goods. But the fact as well as contention of appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacture of capital goods which are further used in the factory of the manufacturer. We note that the appellant is also not relying on Explanation 2. The contention of Ld. Counsel is that all goods used for providing output service are eligible for Cenvat Credit. There is no denying the fact that the resultant output service provided by them is 'Passive Telecom Infrastructure' i.e. Business Support Service. Therefore, there is direct nexus of the output services and the credit taken on the goods procured such as steel, racks, bolts etc. which are excisable and were cleared under Central Excise invoices showing payment of Central Excise duty. The payment of Central Excise duty on these goods and their assessment has not been questioned at the end of the supplier. Without use of these duty paid towers/parts as inputs, the Business Support Service in the firm of Passive Telecom Infrastructure could not have been provided. The appellant availed credit under Rule 3(1)(i) which allows Cenvat credit on any inputs or capital goods received by the provider of output service. The appellant received inputs such as structural steel for providing 'Passive Telecom Infrastruc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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