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TMI Blog2017 (10) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tribunal, in that circumstances, the allegation of suppression or concealment on fact/mis-statement is not sustainable - the extended period of limitation is not invocable, therefore, the demands pertaining to the extended period of limitation are set aside - penalties also set aside. Appeal allowed in part. - ST/92,162,579,768,777/2009 - A/61918-61922/2017-CU[DB] - Dated:- 28-7-2017 - Mr. Ashok Jindal, Member (Judicial) And Mr. Devender Singh, Member (Technical) Ms. Krati Somani, Advocate- for the appellant Shri. Satyapal, Shri. V.Gupta, Shri. Atul Handa, ARs- for the respondent ORDER Per: Ashok Jindal The appellants are in appeal against the impugned orders wherein the cenvat credit on towers, shelters prefabricated building etc. has been denied. Consequently, the duty was demanded along with interest and equivalent amount of penalties were imposed. Aggrieved from the said orders, the appellants are before us. 2. The ld. Counsel for the appellant submits that the appellants are engaged in providing Telecommunication Services and availed cenvat credit of the duty paid on towers, tower materials, shelters pre-fabricated building etc. The R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when all the details have been supplied by the appellants, the show cause notice was issued to the appellant immediately. Therefore, the extended period of limitation is rightly invoked, as the appellant has suppressed the details of availment of cenvat credit from the department. 5. Heard the parties and considered the submissions. 6. After hearing both the sides, we find that the following issues emerge for the arguments advanced by both the sides. (A) Whether the appellant is entitled to avail cenvat credit of duty paid on towers material, shelters pre-fabricated buildings etc. or not? (B) Whether in the facts and circumstances of the case, the extended period of limitation is invocable or not? (C) Whether the penalty is imposable on the appellant or not? Issue No. 1 (On Merits): As the Larger Bench of this Tribunal in the case of BSNL and others (supra) has held that cenvat credit is not available on the above said items, as they have become immovable property and has affixed to the earth. Therefore, relying on the decision of the Larger Bench of this Tribunal which has been followed by this Tribunal in the case of Vodafone Essar Mobile Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (for the purposes of building, operating and maintaining passive telecom infrastructure and where on the towers erected and maintained but nonetheless continued to be owned by the petitioner the passive infrastructure provider; goods which are indisputably integrally associated with the building and maintenance of the cell towers), are goods falling within the ambit of Section 8(1) read with the provisions of Section 8(3)(b) of the CST Act, and thus exigible only at the concessional rate of tax provided in Section 8(1). 21. Further the Hon ble High Court observed as under: The BSNL ruling that telecommunication tower is immovable property may not be of direct relevance to the issue on hand in the present lists as the impugned orders of penalty are not predicted on a premise by the Revenue that the income received by the passive infrastructure providers is exigible to tax under the 2005 Act. The case of the Revenue is that there was a misuse of C forms and that the incorporation and use for provision of the passive telecommunication infrastructure (of goods procured through inter-state transactions) are not comprehended within the expression telecommunications networks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in rejecting the claim of the assessee in light of the provisions of Rule 2(k) of the Cenvat Credit Rules, 2004? 7.8. In the said case Hon ble High Court has observed in para 7, 8 and 9 as under: 7. it is not disputed that jetty was constructed and input credit was claimed on cement and steel. The aforesaid definition of Rule 2(k) was applicable and Explanation 2 did not provide that cement and steel would not be eligile for input credit. According to learned consel for the appelant, the appellant is not manufacturer and, therefore, the provisions Explanation 2 of Rule 2(k) would be applicable only to the factory and manufacturer. The appellant is neither having any factory nor he is manfuacturer. The appellant is a service provider of port. We need not go into this question as to whether the appellant is a factory or manufacturer or service provider in view of that fact that it is not disputed by mr. Y.N. Ravani, learned counsel appearing for the Revenue in this Tax Appeal that the appellant providers service on port for which he is getting jetty constructed through the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision, it clearly mentions intention in the notification itself and seeks to clarify existing provision. Even, if the new provision is added then it will be new amendment and cannot be treated to be clarification of particular thing or goods and/orinput and as such, the amendment could operate only prospectivley. In our opinion, the view taken by the Tribunal is based onconsjectures and surmises as the Larger Bench of the Tribunal used the expression that intention behind amnedment was to clarify. The coverage under the input from where this intention has been gathered by the Tribunal has not been mentioned in the judgement. There is no material to support that thre was any legislative intent to clarify any existing provision. For the same reason, as mentioned above, the decision of the Apex Court in Sangam Spinners Limited Vs. Union of India and others, reported in 2011 (11) SCC 408 = 2011-TIOL-31-SC-CX would not be applicable to the facts of the instant case. 9. Mr. Ravani has also vehemently urged that since jetty was constructed by the appellant through the contractor and construction of jetty is exempted and, thereofre, input credit would not be available to the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case in hand, wherein it has been said that 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. The adjudicating authority has heavily relied on Explanation-2 to the said Rules as same has been discussed by the Tribunal in the case of Bharati Airtel Ltd. (supra) . In fact, the explanation also clarified that inputs includes goods used in manufacture of capital goods which are further used in the factory of the manufacture. But in the case in hand, the appellant is a service provider. Therefore, the said explanations have no relevance to the facts of this case. As per Rule 2(k)(ii) 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 Service in the form of Passive Telecom Infrastructure . This Passive Telecom Infrastructure enables all Telecom Operators to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 985 and paid duty thereon as 'capital goods' and same has been accepted by the Revenue. In these circumstances, we hold that in the said appeal, the appellant is entitled to take Cenvat Credit on towers and shelters to the tune of R.2,59,95,327/- as 'capital goods'. 9. We also find that the issue of availment of Cenvat Credit on the items in question is still in dispute as there are conflicting decisions of the Hon ble Bombay High Court in the case of Bharti Airtel Ltd. (Supra) and of Hon ble High Court of Gujarat in the case of Mundra Ports Special Economic Zones Ltd. (Supra) . Moreover, first time the issue was decided against the appellant by this Tribunal on 06.01.2012 in the case of Bharti Airtel Ltd. (Supra) . Therefore, the allegation of suppression of fact is not sustainable. Consequently, the extended period of limitation is not invokable in these matters as in some of the cases, the assessing authorities themselves were allowing Cenvat Credit on these items. Therefore we hold that extended period of limitation is not invokable. Accordingly, the demand pertains to extended period of limitation are set aside. 10. On merits, we find that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Business Support Services for providing passive infrastructure, the appellants are entitled to take Cenvat Credit on towers, pre fabricated shelters parts thereon, etc. c) In appeal no. ST/777/2009, the appellant is entitled to take Cenvat Credit to the tune of ₹ 2,59,95,327/- on shelters / parts as capital goods wherein the supplier has paid Excise duty on these items by classifying under Chapter 85 of the Central Excise Tariff Act 1985. d) The extended period of limitation is not invokable. Therefore, the demands beyond the normal period of limitation are set aside. e) Penalties imposed on the appellants are set aside. 15. The issue involved in these appeal is whether cenvat credit on telecom towers and pre-fabricated building and parts thereof is admissible. 16. I fully agree with para 12(a) of my Ld. Brothers order that on merits the appellants have no case in the light of decision of Bharti Airtel Ltd. (supra) of High Court Bombay. Indeed in para 10 of his judgment, it is clearly stated that: 10. On merits, we find that the facts of the cases in hand are similar to the facts of the cases of Bharti Airtel ltd. (Supra), although we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then they cannot be capital goods or inputs) is thus directly applicable even in cases where the towers are shared by other telecom companies to provide telecom services. Merely fact that the owner of such a tower allows some other company to use it for providing telecom service in no way diminishes the validity and strength of the reasoning ratio, view/finding of Bombay High Court that such towers are not goods. Further, once Mumbai High Court has concluded after a reasoned and rational analysis that towers are immovable property and not goods, they cannot become moveable, property/goods merely because they are differently classified by some or are shared by some telecom operations (other than their (i.e. towers) owners) to provide telecom service or even some other service. Thus I have no doubt in my mind that the order contained in para12(b) and 12 (c) quoted above is in contradiction of the reasoning, ratio and view/finding of the Bombay High Court Judgment which my ld. Brother has also held to be binding on CESTAT. 18. My Ld. Brother has referred to the Judgment's of CESTAT in the cases of GTC Infrastructure (Supra) and M/s Reliance Infratel ltd. (Supra) . While t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratel merely because they were also shared by other telecom service providers, it is more so because, as stated earlier, the analysis reasoning and ratio based on which the High Court came to the view/finding that towers are not goods was independent of their classification and or the output service they were used in relation to. 19. In view of the foregoing, I am of the firm view that the CESTAT judgement in case of Reliance Infratel does violence to the reasoning, ratio and finding of the judgement of Bombay High Court in the case of Bharti Airtel and is not in conformity therewith. Therefore, CESTAT judgement in the case of Reliance Infratel (Supra) has no value as a precedent. 20. In addition to what is stated above, I may also observe that once telecom towers, PFB and parts thereof are held to be ineligible for credit by Bombay High Court in the case of Bharti Airtel (supra) to allow credit on PFB in some other case in similar set of circumstances merely because those were classified by the supplier in a different chapter will also not be in conformity with the said Bombay High Court judgement, more so when immovability thereof has been taken as a ground by Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation are set aside. Consequently, the penalties on the appellants are not imposable. 8. In view of the above, the following order is passed. (A) Demands along with interest within period of limitation are confirmed. (B) Demands for the extended period of limitation are set aside (C) Penalties imposed on the appellant are also set aside. With these terms, the appeals are disposed off. (Dictated and Pronounced in the open court) Devender Singh Member (Technical) Ashok Jindal Member (Judicial) Per Devender Singh: While I am in agreement with result of appeal, I have recorded my legal reasoning on the extended period and penalty separately as below: Undoubtedly, the issue of cenvat credit in respect of telecom towers, PFB and parts thereof was debatable and could not have been said to be free from doubt during the relevant period and substantial question of law was the subject matter before the Division Bench of the Tribunal as well as Larger Bench and Hon ble High Court of Bombay. In these circumstances, the extended period of limitation could not apply, especially when both the members of referral bench had held that the extend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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