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TMI Blog2015 (9) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... he "said goods") purchased by them and used for providing output service. In both the Appeals, the Appellant and the Respondent are one and the same and the questions of law, as framed, are also identical. The only difference between the two Appeals is the period for which the Appellant had availed of CENVAT credit and which was now being demanded and recovered from them under Rule 14 of the "CENVAT Credit Rules, 2004" r/w section 73 of the Finance Act 1994, alongwith interest and penalty. In these circumstances, both the Appeals are being disposed of, by consent of parties, by this common order and judgment. For the sake of convenience, we shall refer to the facts in Central Excise Appeal No.127 of 2015. 2. According to the Appellant, these Appeals give rise to the following substantial questions of law:- (a) Whether in the facts and circumstances of the case the Tribunal has erred in law by adding an additional condition through interpretation in Rule 2(k) of the CENVAT Credit Rules, 2004 being that the goods that are used for providing output services should not be embedded in earth? (b) Whether the Tribunal has erred in law in interpreting Rule 2(k) of the CENVAT Credit ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether in the facts and circumstances of the case, the Hon'ble Appellate Tribunal erred in not appreciating that towers were accessories to the capital goods? (k) Whether the Tribunal erred in law to appreciate that the identity of towers and pre-fabricated buildings / shelters are not lost merely when they are embedded in the earth prior to use and continue to qualify as 'inputs' under Rule 2(k) of the CENVAT Credit Rules 2004? (l) Whether the Tribunal erred in law in appreciating that there is no embargo under Rule 2(k) of the CENVAT Credit Rules, 2004 in relation to the manner in which goods ought to be used for providing any output service and therefore, even upon installation as a part of an overall system they can qualify as inputs for rendition of output services? (m) Whether the Tribunal failed to appreciate that even the capital goods can fall under definition of 'inputs' and are, therefore, eligible for credit under Rule 2(k) of the CENVAT Credit Rules, 2004? (n) Whether the Tribunal failed to appreciate that the process of embedding the Towers and pre-fabricated buildings / shelters is not a permanent process and the same can be removed and rei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / prefabricated buildings purchased by them and used for providing output service. 5. As the statutory authorities were of the view that the Appellant is not entitled to avail of CENVAT credit under the "CENVAT Credit Rules 2004", show cause notices were issued to the Appellant for the period from 2005-2006 to 2010-2011, the details of which are given at paragraph 11 of the Memo of Appeal. These show cause notices were replied to by the Appellant denying all the allegations set out therein and contending that the said goods were capital goods and / or in the alternative, should be treated as inputs and therefore they were entitled to claim CENVAT credit. Thereafter, the Commissioner (TAR), Mumbai, after granting the Appellant a personal hearing, adjudicated the said show cause notices and by his order dated 30th October 2012, confirmed the demand therein alongwith interest and penalty. As far as the demand to the extent of Rs. 45,05,15,200/- was concerned, the same was dropped on account of duplication in computation of two show cause notices dated 31.03.2009 and 22.04.2010 respectively. 6. Being aggrieved by this order of the Commissioner, the Appellant preferred an Appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for providing output service. According to Mr Salve, at the time the input duty is paid, the duty should relate to the goods acquired by the service provider. Thereafter, if the goods are required to be fastened to immovable property to facilitate their use, would not by itself, make them lose their character as 'goods', was the submission of Mr Salve. 9. Mr Salve, in his usual fair manner, pointed out to us a decision of a Division Bench of this Court in the case of Bharti Airtel Ltd. v/s Commissioner of Central Excise, Pune - III, 2014 (35) S.T.R. 865 (Bom.) to which one of us (S.C. Dharmadhikari J.) was the party. He submitted that though a Division Bench of this Court in Bharti Airtel's case has taken the view that the telecom service provider is not entitled to CENVAT credit for the duty paid on the said goods on the ground that it is immovable property and hence, do not qualify as 'capital goods' or 'inputs', the same required a relook in view of the fact that the submissions now made before us were either not made nor considered in the case of Bharti Airtel Ltd. For all the aforesaid reasons, Mr Salve submitted that these Appeals raise substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utshell, and so far as they are relevant for our purposes, the arguments of the Appellants therein were as follows:- (a) The Tribunal has misinterpreted the application of CENVAT Credit Rules, 2004 in rejecting the Appellant's claim to avail credit of the duty paid on the towers and parts thereof, prefabricated shelters and the printers. The goods in question clearly fall within the ambit of the definition of "capital goods" under rule 2(a)(A) of the Cenvat Credit Rules 2004; (b) that in the alternative, the goods in question fall within the definition of "input" under rule 2(k) of the Credit Rules. The tower and shelter were received by the Appellants in knocked down condition (CKD) and were used for providing telecom services and hence these goods qualify as "inputs" in terms of rule 2(k) of the Credit Rules. Rule 2(k)(2) uses the words "all goods" which are "used for providing any "output service" and therefore, these goods completely fall within the purview of rule 2(k) so as to mean inputs; (c) that a combined reading of these definitions, read with rules 3 and 4 of the Credit Rules, entitle the Appellants to avail the credit of duty paid on purchase of these goods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) of the Credit Rules so as to be capital goods. The goods in question would not be capital goods for the purpose of CENVAT credit as they are neither components, spares and accessories of goods falling under any of the chapters or headings of the Central Excise Tariff Schedule as specified in sub-clause (i) of the definition of capital goods. *************** 31. In the light of the aforesaid discussion we examine whether on the rules as they stand the appellants would be entitled to the credit of the duty paid on the item in question on the output service namely the cellular service. We may observe that a plain reading of the definition of 'capital goods' as defined 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production, and as provided in sub-clause (ii) all goods except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id towers and PFB and printers is defeated by the very wording of the definition of input. 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." (emphasis supplied) 14. On carefully going through the decision in Bharti Airtel's case we find that the said decision squarely applies to the case of the Appellant before us. We find that this Court has considered all aspects of the matter and then come to the conclusions that it did. Mr Salve, despite all the finesse at his command, was unable to persuade us to hold that the decision in Bharti Airtel's case requires a relook. The very provisions that were relied upon by Mr Salve, were considered and interpreted by the Division Bench in Bharti Airtel's case. Not only are those findings binding on us but we are in full agreement with the same. Once th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 1 1963 SC 151], Ballabhadas Mathurdas Lakhani v. Municipal Committee, Malkapur [(1970) 2 SCC 267 : AIR 1970 SC 1002], Ambika Prasad Mishra v. State of U.P. [(1980) 3 SCC 719 : AIR 1980 SC 1762], SCC p. 723, para 6 and Director of Settlements v. M.R. Apparao [(2002) 4 SCC 638 : AIR 2002 SC 1598] .)" (emphasis supplied) 15. To be fair to Mr Salve, we must mention here that the decision in Bharti Airtel's case has been challenged before the Supreme Court in Civil Appeal Nos.10409 and 10410 of 2014 in which notice has been issued and the Supreme Court has ordered that these Civil Appeals be tagged with Civil Appeal Nos.5698 and 5699 of 2012 arising out of SLP (Civil) Nos.22864 and 22865 of 2011 [Commr. Of Cen. Exc. Vishakhpatnam Vs. M/s. Sai Samhita Storages P. Ltd.]. However, as far as we are concerned, the issue stands concluded by the decision of this Court in Bharti Airtel's case. 16. In view of our discussion earlier in this judgment, we find that the issues raised in the present Appeals are squarely covered by the decision of this Court in Bharti Airtel's case and therefore raise no substantial questions of law that need to be answered by us. In this view of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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