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TMI Blog2015 (4) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants are taken up for disposal by this common order as the issue involved in these appeals is the same and arises out of similar facts. 2. The miscellaneous applications filed by one of the applicants/appellants, M/s. Tata Teleservices Ltd., is for producing additional evidences in support of their appeals as also raising additional grounds of appeal. 3. Learned Senior Advocate submits that the additional evidences, which are brought on record, are in form of expert's opinion issued by the Professor of Indian Institute of Technology and that covers are immovable properties and inputs. In addition to the various case laws and also the photographs of the dismantling of towers, he would submit that they would also bring on record additional evidences in the form of agreement between M/s. Tata Teleservices Ltd., and Bhrati Airtel Ltd., for Infrastructure sharing i.e, sharing of towers and cabins for rendering various services, i.e. "Passive Infrastructure Sharing" and it is his submission that the revenue earned by M/s. Tata Teleservices Ltd., is subjected to service tax under the category of "Business Support Services", and he urges that the miscellaneous applications be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being recorded separately, so as to deal with them in that order. 8.1 M/s. TTL herein were issued show-cause notices dated 22/04/2010, 07/10/2010 and 24/10/2011 directing them to show cause as to why the Cenvat credit availed by them on towers, towers parts, cabin, cabin parts, medi-claim services and goods other than towers, pre-fabricated buildings and shelters availed during the period April 2004 to March 2011 to be considered as ineligible and be not demanded along with interest and also directed them to show cause as to why penalties be not imposed on them. One of the show-cause notices was invoking extended period while other two show-cause notices are issued for the demands within the limitation period. The said show-cause notices were issued on scrutiny of Cenvat credit accounts maintained by M/s. TTL. It was noticed by the authorities that M/s. TTL has availed Cenvat credit under capital goods and subsequently under the inputs. M/s. TTL were informed that they are ineligible to avail the said Cenvat credit in response to which M/s. TTL defended their action due to which the lower authorities came to a conclusion that M/s. TTL had deliberately avoided in furnishing the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng authority is incorrect. He would then take us through the entire order-in-original as also the show-cause notices. He would then take us through the provisions of Cenvat Credit Rules, 2004 (hereinafter referred to as CCR), more specifically reads the provisions of Rule 2 & 3. He would submit that provisions of Rule 2 wherein the definition of capital goods and the definition of inputs, are more important. He would submit that the plain reading of Rule 2 (k) (ii) of the inputs as well as Rule 2 (a) of the capital goods definition would indicate that Cenvat credit of duty paid on the item is available for the assessee, who is providing taxable output services. He would submit that the definitions are wide in scope and simple and there is no ambiguity. He would submit that the appellants have claimed the Cenvat credit on the towers, pre-fabricated buildings and shelters as they are utilised by them for providing output service, i.e., telecom services. He would also submit that the appellant shares the infrastructure facilities as per statutory requirements with other telecom service providers and charged them some amount, which has been brought under service tax under the category ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de inputs in the final activities of manufacture or provision of services and credit cannot be denied on the ground that at some stage some immovable property is coming into existence; and the proposition is totally irrelevant and non-germane to the assessee's entitlement to Cenvat credit as stipulated in CCR; condition of entitlement to the credit on the ground of use cannot be created by the revenue when non-existence in statute books. He relies upon the following judgements for these propositions: i) Escorts Ltd., Vs. CCE, Delhi - 2004 (171) ELT 145 (SC) ii) Shree Ramkrishna Steel Industries Ltd., Vs. CCE, Madras - 1996 (82) ELT 575 iii) Sai Sahmita Storages Ltd., 2011 (270) E.L.T. 33 (A. P.) iv) SG Navaratna Highway 2012 (28) S.T.R. 166 (Tri. - Ahmd.) V) Laxmi Enterprises - 2014 (9) TMI 35 12. Learned Counsel also submits that towers and shelters are used by them as a service provider for providing telecommunication service (output service) as also passive infrastructure service; this plea and factum of use of towers and shelters has not been contradicted as incorrect or rejected by the adjudicating authority. Learned Counsel would also submit that the adjudicating au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel Shri Mihir Deshmukh, appearing on behalf of the TTL would also submit that the show-cause notice invoking extended period is incorrect in this case as the appellant had been always submitting the returns wherein Cenvat credit availment was indicated. He would also submit that the audit of the appellant's records was undertaken and the issue was never raised. It is also his submission that one of the issues in these appeals is also regarding denial of Cenvat credit on the service tax paid on the medi-claim insurance of their employees. He would submit that the issue is now well settled and the appellant is eligible to avail Cenvat credit. 14. Shri V. Sridharan, Senior Advocate appearing for M/s. VIL, ICL & VEL would submit that the arguments taken before the lower authorities in these bunch of cases are not properly addressed. It is his submission that the towers/shelters are movable inasmuch as that the said towers when they are re-located after dismantling and the shelters can also be dismantled and relocated. While supporting the arguments put forth by the learned Counsel for TTL, he would submit that the appellant herein were also rendering the services of business au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinguish the judgment of the Hon'ble High Court of Bombay in the case of Bharti Airtel Ltd. (supra) and submit that the ratio of the case will not be applicable in the facts of this case. He would also submit that in any case extended period of limitation cannot be invoked in this case as the revenue authorities were aware of the Cenvat Credit availment as well as utilisation thereof; records were audited by the authorities and there was no suppression on the part of the appellants and the appellants were being highly contested before the various forums. It is his submission that penalty be set aside, as the issue is a question of interpretation. 15. Shri Naresh Thacker, Advocate appearing on behalf of RTL and RCL would adopt all the arguments put forth by the senior counsel and hands over a chart indicating of demands in the cases of RTL and RCL. He would read the show-cause notice dated 17/11/2005 to show what is the case of the Revenue. As regards the RTC, it is his submission that there cannot be an allegation of suppression as the show-cause notice on an identical issue had been issued in respect of financial year 2006-07 and 2007-08 by the Indore Commissionerate as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e RCL, it is his submission that on merits he is adopting all the arguments made by the Senior Counsel. On limitation it is his submission that the appellants were issued draft audit para by the audit party intimating the appellant about the Cenvat Credit on towers, pre-fabricated buildings etc., on conducting audit of its records for the period 01/04/2004 to 30/09/2006. He would submit that draft audit observations after the audit was communicated to appellant by letter dated 23/02/2007 which was replied by the appellants on 20/03/2007, wherein the appellant gave a detailed explanation and followed up the same by a letter dated 11.06.2007 explaining therein how they are eligible to avail Cenvat Credit on the goods i.e., towers and shelters. He would then draw our attention to the final audit report which has been issued to the appellants vide letter dated 19/10/2007 and submits that though the draft audit observations communicated to the appellants on 23/07/2007 indicated that the appellant had possibly availed ineligible Cenvat Credit on the towers and shelters, but the final audit report dated 19/10/2007 did not contain the allegations on improper availment of Cenvat Credit on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticularly, when the definition as falling under the Cenvat Credit Rules are distinct and are noticeably different. (g) The decision of the Supreme Court in "Collector of C.E. Vs. Jay Engineering Works Ltd., (1989(39) E.L.T. 169(S.C.)" concerned the nameplate affixed on a fan which was held as an as an input and an essential ingredient failing which the fan does not become marketable and covered by a notification entitling the manufacturer for set off duty on the nameplates. This decision however is ex-facie not applicable in the present context. (h) The reliance of the appellant on the judgment of the Division Bench of this Court in the case of "Deepak Fertilizers & Petrochemicals Corpn. Ltd. Vs. C.C.E., Belapur, (2013(288) E.L.T. 316(Tri.-Mumbai)) " would also be of no assistance to the appellant. The appellant relied on the following observations in paragraph (5) of the judgment. "The Tribunal has placed an interpretation which runs contrary to the plain and literal meaning of the words used in Rule 2(1). Moreover, as we have noted earlier, where as Rule 3(1) allows a manufacturer of final products to take credit of excise duty and Service Tax among others paid on any input o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orations in the State to charge retrospectively from 9.10.1996 a premium at the rate of land value as per the ready reckoner for the area occupied by the cabin, the tower for granting permission under Section 45 of the MRTP Act to the petitioners for installing the semi permanent structures/ cabins on the top of the building for housing Base Station/Telephone Connector to set up a cellular mobile telecommunication system. In this context the Division Bench in interpreting the provisions of MRTP Act and considering the nature of cabins and the towers in paragraph 26 has observed as under:- "26. .......... At the same time, the tower and the cabin would be within the meaning of the "building" as well as the "development" under the BPMC Act (including other Corporation Act) and the MRTP Act respectively. The expression "development" under the MRTP Act clearly includes erection of any structure as well as any material or structural change in the building or its precinct. The term "precinct" would refer to the area adjacent as well as adjoining the building." (g) In the case of "Municipal Corporation of Greater Bombay and others Vs. Indian Oil Corporation Ltd., (1991 Supp (2) Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but and is an immovable property. On GTL infrastructure Ltd., it is his submission that it cannot have any precedential value in the case in hand. Subsequently, he would distinguish the various judgements relied upon by the Counsel and submit that when there is a direct judgement of the jurisdictional High Court, the same needs to be followed. As regards the limitation, he would submit that Rule 9 of CCR mandates that availment of credit and correctness thereof is the responsibility of the assessee. He would submit that burden to prove as to the eligibility and correctness of the Cenvat credit availed lies on the assessee taking credit. While at least in the case of TTL the assessee had argued before the Hon'ble High Court that the goods were immovable property, if that be so, how they can claim limitation today. It is his submission that in the case of TTL as well as others special audit or audit which has been conducted cannot be held to be a relevant factor for non invocation of extended period. 18. We have considered the submissions made by both the sides at length and perused the records. 19. The issue involved in these cases is regarding the eligibility to avail Cenvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harti Airtel Ltd., (supra) as regards the eligibility to avail Cenvat credit would be directly applicable in all these cases. In the said case the Hon'ble High Court had formulated the substantial question of law which reads as under: "Whether in the facts and circumstances of the case, the Appellate Tribunal was correct and justified in holding that the Appellant was not entitled to credit of duty paid on tower parts, green shelter on the ground that tower/green shelter is "immovable property" and hence, do not qualify as "capital goods" or "inputs" as defined under the Cenvat Credit Rules, 2004? "Whether in the facts and circumstances of the case, the Appellate Tribunal was correct and justified in holding that tower would not qualify as "part" or "component" or "accessory" of the capital goods i.e. antenna?" 22. Their Lordships after considering all the detailed submissions made by the counsel before them and considering various case laws, came to a conclusion that Cenvat credit cannot be availed by the appellant therein either under the category of capital goods or inputs on the towers or pre-fabricated buildings. The relevant paragraphs wherein the Lordship have recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efined 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 "composi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used for providing any output service. Explanation (2) of sub-rule (k) is also which provides that input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. A plain reading of the definition of input indicates that in the present context, clause (i) of Rule 2 (k) may not be of relevance as same pertains to manufacturing activity and pertains to goods used in relation to manufacture of final product or any other purpose within the factory of production. Sub-clause (ii) has been referred to as relevant by the appellant as the same pertains to goods except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service. Tower and parts thereof are fastened and are fixed to the earth and after their erection become immovable and therefore cannot be goods. 34. We therefore find no infirmity or illegality in the findings as recorded by the tribunal in holding that the subject items are neither capital goods under Rule 2(a) nor inputs under Rule 2(k) of the Credit Rules and hence CENVAT credit of the duty paid thereon was not admissible to the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Transfer of Property Act gives the following meaning to the expression "attached to the earth": (a) rooted in the earth, as in the case of trees and shrubs; (b) imbedded in the earth, as in the case of walls or buildings; or (c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached. The question whether a chattel is imbedded in the earth so as to become "immovable property" is to be decided on the principles of annexation to the land. The twin tests are the degree or mode of annexation, and the object of annexation. (Solid and Correct Engineering Works v. CCE (2010) 5 SCC 122. From a combined reading of the definition of "immovable property", in Section 3 of the Transfer of Property Act and Section 3(26) of the General Clauses Act, it is evident that, in an immovable property, there is no mobility. The test of permanency is whether the chattel is movable to another place of use in the same position, or is liable to be dismantled and re-erected at the latter place? If the answer is yes to the former it must be a movable property and, thereby, it must be held that it is not attached to the earth. If the answer is yes to the latter, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rastructure'. They relied upon the decision of the Hon'ble High Court of Andhra Pradesh in the case of Sai Sahmita Storages Ltd., SG Navaratna Highway and GTL Infrastructure Ltd. (supra) to submit that if immovable property comes into existence but used for providing services on which tax is payable, Cenvat Credit cannot be denied on the inputs. They would also rely upon the judgements of this Bench in the case of GTL Infrastructure Ltd., for the proposition. We gave an anxious consideration on the submissions made on this point. In our considered view, we find arguments put forth by the learned Counsel needs to be rejected at the out set itself, inasmuch as the first and foremost in all these three cases, the issue before the Hon'ble High Court and the Tribunal was that the appellants therein were providers of storage and warehousing services; immovable property service and business auxiliary service, for which they need to have infrastructure in its place. In the cases in hand, with which we are dealing with are the telecommunication companies providing cellular services, we find that basically all the appellants herein are providers of telecommunication/cellular serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as - 2003 (152) ELT 251, the Hon'ble Apex Court held that three requirements have to be cumulatively satisfied for invoking extended period while observing as under: A perusal of the proviso, extracted above, makes it clear that where duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of the Central Excise Act or of the rules made thereunder with intent to evade payment of duty by such person or agent, the period of limitation of one year in the main section is substituted by the words "five years". In other words, where the said proviso is attracted the duty etc. can be claimed even after expiry of one year for an extended period of five years from the date of the demand. To invoke the proviso three requirements have to be satisfied, namely, (1) that any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded; (2) that such a short-levy or short-payment or erroneous refund is by reason of fraud, collusion or willful mis-statement or suppression of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the case of Rajkumar Forge Ltd., Vs. UOI - 2010 (262) ELT 155 (Bom) and the Hon'ble Karnataka High Court in the case of CCE, Bangalore Vs. MTR foods Ltd., - 2012 (282) ELT 196 (Kar) has appreciated that if the returns were filed promptly and audit has also taken place; as there were no lack of bonafides; their Lordships took a view that in such a situation extended period cannot be invoked. In our considered view, in all these appeals all the appellants acted under bonafide belief that they are eligible for Cenvat credit of duty paid on towers and pre-fabricated buildings and filed returns indicating availment and utilisation of credit, allegation of suppression of material facts with intent to evade tax cannot be sustained. 32. We find considerable force in the arguments raised by the learned Counsel on limitation; accordingly, we hold that the impugned orders that confirms the demands invoking extended period of Cenvat Credit availed and utilised by all appellants herein, are unsustainable and are liable to set aside and we do so. 33. As regards the demands which are within the limitation period; on merits the issue is covered against the appellants, demands in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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