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TMI Blog2018 (11) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... conjunction with the Antenna and the BTS equipment in providing the output service, which also includes provision of the Business Support Service. The CESTAT has failed to appreciate that the towers and the parts thereon and the pre-fabricated shelters are inputs, in accordance with the provisions of Rule 2(k) of the Credit Rules. Credit on inputs such as MS Angles and channels - Held that:- clearly goods in question have gone into the making of such towers which in turn are used for providing infra-support service/ telecom service. It is therefore, held that the CESTAT erred in applying the nexus test and therefore, credit has to be extended to the duty paid MS angles and channels. Immovable property or not - Held that:- the definition of input does not contain any condition relating to emergence of immovable property to be ineligible for taking credit. The eligibility of credit must be determined at the time of receipt of the goods in terms of Rule 4(1) of the Credit Rules. Credit cannot be denied so as long as the goods are used for the provision of the output service. The towers which are received in CKD condition, are assembled/ erected at the site subsequently giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in SERTA 1520/2016. MR. JUSTICE S. RAVINDRA BHAT 1. In all these appeals, preferred under Section 35E of the Central Excise Act, 1944 (hereafter referred as the Excise Act ) and Section 83 of the Finance Act, 1994 ( the Act ) the common question of law is whether parts of base transmission systems (hereafter BTS ) are classifiable under Tariff Heading 8517 and, consequently, all components, spares and accessories qualify as capital goods in terms of Rule 2(a)(A)(iii), of the CENVAT Credit Rules, 2004 (hereafter the Credit Rules ) regardless of whether those components, spares and accessories only fall under Chapter 85. The questions of law framed are: i) Whether the CESTAT was right in concluding that the towers, shelter and accessories used by the Appellants for providing telecom services are immovable property? ii) Whether the Appellants are entitled to claim CENVAT credit on the towers, shelter as accessories either as capital goods or input goods in terms of Rule 2(a) or 2(k) of the Credit Rules? iii) Whether the CESTAT erred in applying nexus test with reference to MS Angles and Channels, whereas according to the Appellants what was brought to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which did not qualify as capital goods within the meaning of the Credit Rules. It was stated that after verification of documents and records relating to CENVAT credit on account of capital goods for the periods in question, it was observed that the credit availed was not in accordance with the provisions of Credit Rules and same was in contravention of the Rules. The relevant Rule being Rule 2(a)(A) of the Credit Rules which defined Capital goods . It was stated that while availing CENVAT credit in respect of any goods as capital goods the requirement of Rule 2(a)(A) of the Credit Rules stipulates satisfaction of following two conditions:- (a) The goods should fall under a particular CSH or description specified for the purpose; (b) That in case of the service provider, the goods should be used for providing output service. 4. The Revenue alleged that CENVAT Credit availed by the assessees during the various periods outlined in the show cause notices in respect of the various items, including towers and parts of tower was in contravention of Rule 2(a)(A) of the Credit Rules. Alleging that the assessees in their return had omitted to give any chapter heading unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BTS was classifiable under heading 85.25 of CETA which comprises of the tower also as one of its parts, without which the output service cannot be provided. It was, therefore, contended that the towers are part of the eligible capital goods, viz. BTS and are used for providing output services, as also the towers were eligible for capital goods credit. 6. The assessees stated that they had imported number of BTS for installation at various sites and that the BTS equipment were classified under heading No. 85.25 of the CETA, when imported. Depending on the site condition, additional peripheral equipment such as battery back-up, rectifier, UPS were also purchased by them. All these were brought to the site and they were housed/installed in a pre-fabricated room or a building. Subsequently, installation of various equipments at the site is undertaken in accordance with the Radio Frequency Design Plan. The assesses argued that the material was ordered from various vendors having regard to the site lay out and report of the structural consultant. All the material was supplied by the vendors on payment of applicable duty on clearance from their factories. Later, erection of the towe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that they had wrongly availed credit by practicing fraud or by making wilful mis-statement, collusion or suppression of facts. It was stated that there was no wilful suppression. It was, therefore, submitted that the show cause notice as issued against them be dropped. 9. The Commissioner, after granting a hearing to all assesses and after taking into consideration the provisions of the Credit Rules (especially, the definition of capital goods as defined under Rule 2(a)(A) and the definition of the term inputs as defined under rule 2(k) of the Credit Rules), rejected their submissions. It was held that the assessees had wrongly availed of different CENVAT credit amounts under provisions of Rule 14 of the Credit Rules read with Section 73 of the Act. In respect of towers and parts thereof, pre-fabricated building, printers and office chairs, the Commissioner observed that the appellant had availed the benefit of CENVAT Credit on BTS claiming to be a single integrated system consisting of tower, GSM or Microwave Antennas, Pre-fabricated building, isolation transformers, electrical equipment and various other items. It was observed that these systems have been treated as com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.T.R. 577 (Tri. - Mumbai) and Tribunal s final order No. A/382-383/2015 dated 26/11/2014 in Reliance Infratel Ltd. v. CST, Mumbai - II reported in 2015 (38) S.T.R. 984 (Tri. - Mumbai). We have perused the GTL Infrastructure Ltd. decision. In the said decision it was mentioned that towers/BTS Cabins were used for providing business auxiliary service and, hence, CENVAT credit cannot be denied. Further, reliance placed by the Original Authority on Explanation II and Rule 2 (k) (i) was found to be incorrect as the same dealt with a manufacturer and not a service provider. The Tribunal was referring to its earlier order in Bharti Airtel Ltd. v. CCE, Pune reported in 2013 (29) S.T.R. 401 (Tri. - Mumbai) and observed that the said case dealt with facts which are totally different. It was found that since appellants were allowing the operators right to install antenna and BTS equipments and rendering an output service under business auxiliary service they were eligible for credit. We find that this decision of Tribunal is not based on a proper appreciation of the ratio of the Hon ble Bombay High Court. The Hon ble Bombay High Court order in Bharti Airtel Ltd. (supra) was not available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CENVAT credit flow in such situation was not examined in detail in the said order. Similarly, the Hon ble Gujarat High Court also arrived at similar conclusion. It is seen the Hon ble Punjab Haryana High Court in Belsonica Auto Components India P. Ltd. (supra) was dealing with credit availability on input service paid on construction of civil structure. In the present case, we are dealing with credit eligibility of goods, either as inputs or as capital goods. Further, with due respect to these decisions, it is to be noted that the very same matters covered in the present appeals are discussed elaborately on a similar set of facts by the Hon ble Bombay High Court in Bharti Airtel Ltd. (supra). When there is a detailed examination and ruling on identical set of facts by the Hon ble High Court, the same are to be followed. Further, the Hon ble Bombay High Court reiterated their findings arrived in Bharti Airtel Ltd. (supra) in the case of Vodafone India Ltd. in their order dated 01/09/2015 in civil appeal No. 126/2015 and others. The Hon ble Bombay High Court examined various contentions now raised in these appeals and reiterated their findings recorded earlier in Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited by the assessees - Commissioner of Central Excise v Solid and Correct Engineering Works 2010 (5) SCC 122 was inapplicable. The separate opinion observed, among others that: 39. Assessees contend before us that in the facts before us, as in the case of Solid and Correct Engineering Works there is no permanent affixation of towers and the pre-fabricated shelters to the earth, permanently. These are fixed to foundations by nuts and bolts, not with the intention to permanently attach them to the earth or for the beneficial enjoyment thereof, but only since securing these to a foundation is necessary to provide stability and wobble/vibration free operation and to ensure stability. Since affixation of towers and shelters is without the necessary intent of making these a non-temporal part and parcel of the earth to which these are temporally fixed, these continue to be movables and goods; and do not normatively, undergo transformation as immovable property, is the core contention. 40. An empirical and normative analyses of M.S. steel angles and other parts used to construct towers or shelters or affixation of towers obtained in CKD condition and prefabricated shelters an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Limited, which are directly on the issue of the character of towers and shelters and parts, and held to be immovable property, constitute the binding law, in so far as we are concerned. Since the provision of towers and shelters as infrastructure used in the rendition of an output service is common to both passive and active infrastructure providers, whether of BAS or BSS in one case and telecom service in the other, consequences of the application of the above Hon ble High Court s rulings, would not be different. Assessees contentions in the present set of appeals 13. This Court proposes to describe the main outline of parties submission on the first and principal issue and later, in respect of each question, analyse the rival arguments. Mr. V. Lakshmikumaran, learned counsel for the assessees argued that credit on towers and shelters and other materials cannot be denied on the ground of immovability. He cited Rule 3 of the Credit Rules to urge that credit is admissible on all inputs and capital goods which are received in the premises of service provider. In the present case, towers and shelters are received in the premises of service providers. Later, when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted that capital goods viz. Antenna and BTS are fitted into the tower and shelter respectively to provide telecommunication service. 17. Mr. Deepak Anand, learned counsel for the Revenue, argued that the findings and order of the CESTAT were justified and based on sound reasons. He urged that the issue relating to eligibility of towers and shelters for CENVAT credit has been clearly settled by the Bombay High Court in Bharti Airtel Ltd. (supra). The clear finding after elaborate analysis by the High Court was not deviated by any other court or over-ruled by the Supreme Court. It was next argued that the Central Excise duty paid on MS Angles, Channels and pre-fabricated buildings are claimed as credit by the assessees. Such items have no direct nexus to the output service of either telecommunication service or business support service. It cannot be said that iron and steel articles are used for providing telecommunication service. It is the immovable tower which is used for providing telecommunication service or business support service. 18. Counsel argued that the CBEC by its Circular dated 04/1/2008 clarified that input of credit of service tax can be taken only if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not spell out an exhaustive definition of the expression immovable property . It simply provides that unless there is something repugnant in the subject or context, `immovable property under the Transfer of Property Act, 1882 does not include standing timber, growing crops or grass. Section 3(26) of the General Clauses Act, 1897, similarly does not provide an exhaustive definition of the said expression. It reads: Section 3(26): immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. 22. A plain a reading of Section 3 (26), shows that it defines immovable property as things attached to the earth or permanently fastened to anything attached to the earth. The term attached to the earth has not been defined in the General Clauses Act, 1897. Section 3 of the Transfer of Property Act, however, 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 and buildings; (c) attached to what is so imbedded for the permanent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation was necessary to provide a wobble free operation to the machine. An attachment of this kind without the necessary intent of making the same permanent cannot, in our opinion, constitute permanent fixing, embedding or attachment in the sense that would make the machine a part and parcel of the earth permanently. In that view of the matter we see no difficulty in holding that the plants in question were not immovable property so as to be immune from the levy of excise duty. 24. The Supreme Court in Triveni Engineering (supra), held that the marketability test requires that the goods as such should be in a position to be taken to the market and sold. Therefore, the Solid and Correct Engineering (supra) line of reasoning emphasizes that if functionality depends upon embedment and assimilation, leading to extinction of movable character, the property is immovable. Triveni Engineering (supra), on the other hand, highlighted the marketability of the goods: whether they can be taken to the market and sold. From the above finding, it follows that to be taken to the market and sold, the turbo alternator has to be separated into its components turbine and other alterna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not per se become immovable property. The Court observed: 5. Apart from this finding of fact made by the Tribunal, the point advanced on behalf of the appellant, that whatever is embedded in earth must be treated as immovable property is basically not sound. For example, a factory owner or a householder may purchase a water pump and fix it on a cement base for operational efficiency and also for security. That will not make the water pump an item of immovable property. Some of the components of the water pump may even be assembled on site. That too will not make any difference to the principle. The test is whether the paper-making machine can be sold in the market. The Tribunal has found as a fact that it can be sold. In view of that finding, we are unable to uphold the contention of the appellant that the machine must be treated as a part of the immovable property of the Company. Just because a plant and machinery are fixed in the earth for better functioning, it does not automatically become an immovable property. 27. In Narne Tulaman Manufacturers (supra), the Court examined whether assembly of parts of a machine used by an assessee to bring into existence a w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther connections with the related equipments. It also noted that removal of the machinery does not involve any dismantling of the turbine and alternator in the sense of pulling them down or taking them to pieces but only undoing the foundation bolts arrangement by which they are fixed to the platform and uncoupling of the two units and, therefore, the turbo alternator did not answer the test of permanency laid down by this Court in the case of Municipal Corporation of Greater Bombay (supra). In our view, the findings recorded do not justify the conclusion of the Tribunal inasmuch as on removal a turbo alternator gets dismantled into its components - steam turbine and alternator. It appears that the Tribunal did not keep in mind the distinction between a turbo alternator and its components. Thus, in our view, the test of permanency fails. The Supreme Court, however, later, in Solid and Correct Engineering (supra) concluded that any plant fixed by nuts and bolts to a foundation involving no assimilation of the machinery with the structure permanently and where the civil foundation was necessary to provide a wobble free operation to the machine, the test of permanency fails. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court allowed the credit. 30. The Revenue contends that the towers and shelters are not per se immovable property but transform and become immovable as they are permanently imbedded in earth in as much as they are fixed to a foundation imbedded in earth. This argument has to be considered in the light of the decisions discussed above. Attachment of the towers in question with the help of nuts and bolts to a foundation (not more than one foot deep), intended to provide stability to the working of the towers and prevent vibration/wobble free operation does not does not per se qualify its description as attached to the earth in any one of the three clauses (of Section 3 which defines attached to the earth ) extracted above. Clearly, attachment of the towers to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. It is also not equivalent to entrenching in the earth of the plant as in the case of walls and buildings, for the obvious reason that a building imbedded in the earth is permanent and cannot be detached without demolition. Imbedding of a wall in the earth is not comparable to attachment of a tower to a foundation meant only to provide st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mantled at the existing site and cannot be moved to another place of use in the same position. 32. In Vodafone India Limited (supra), the Bombay High court held that towers and shelters purchased by the assessee for providing telecommunication service to be immovable property and hence, the assessee was not entitled to the credit of duty paid on them. It in effect followed its previous decision in Bharti Airtel Ltd (supra), and held so: 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 the very rules that have been relied upon by Mr. Salve, are interpreted by the Division Bench of this Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btedly an immovable property. 34. The assessees also rely on a circular of the Central Board of Excise and Customs (CBEC) No. 137/315/2007 CX.4 dated 26.02.2008. This circular clarified eligibility to CENVAT credit on towers and shelters and clearly narrated that the inputs or raw materials involved in the process of setting up of towers become immovable structure. The first two paragraphs of the Circular are extracted below: it has been brought to the notice of the Board that telecom operators are availing CENVAT credit on goods like angels, channels, beams, which are used for building transmission towers. Similarly, CENVAT credit is also being availed on prefabricated building, shelters, PUF panels, etc. used for housing/ storage of generating stes and other equipments. It appears that the telecom operators claim these items to be inputs for providing telecom services. 2. The issue has been examined; the items mentioned above are used for erecting towers, and making housing/ storage units. Thus, there goods are used in making products that cannot be called as excisable goods, being attached to earth, and are not chargeable to excise duty. The items such as angles. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that expression as defined in Section 3 of the Transfer of Property Act. (iii) The fixing of the plants to a foundation is meant only to give stability to the plant and keep its operation vibration free. (iv) The setting up of the plant itself is not intended to be permanent at a given place. The plant can be moved and is indeed moved after the road construction or repair project for which it is set up is completed. 38. A machine or apparatus annexed to the earth without its assimilation by fixing with nuts and bolts on a foundation to provide for stability and wobble free operation cannot be said to be one permanently attached to the earth and therefore, would not constitute an immovable property. Thus, the tribunal erred in relying on the Bombay High Court in Bharti Airtel Ltd (supra). It is also important to understand that when the matter was carried out in the Bombay High Court and the judgment was delivered, the whole case proceeded on the presumption that these are immovable properties. The tribunal failed to appreciate the permanency test as laid down by the Supreme Court in Solid and Correct Engineering (supra). Re Question No. 2 i.e. whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, thereby the order of the Customs, Excise and Service tax Appellate Tribunal is set aside. Consequently, the Civil Miscellaneous Appeal is allowed. No costs. 40. Reliance is also placed on the decision of the Supreme Court in State of Punjab Ors. v. Nokia India Private Ltd. 2015 (315) ELT 162 (SC), where it was held that: 16. The Assessing Authority, Appellate Authority and the Tribunal rightly held that the battery charger is not a part of the mobile/cell phone. If the charger was a part of cell phone, then cell phone could not have been operated without using the battery charger. But in reality, it is not required at the time of operation. Further. the battery in the cell phone can be charged directly from the other means also like laptop without employing the battery charger. implying thereby, that it is nothing but an accessory to the mobile phone. The Tribunal noticed that as per the information available on the website of Nokia/ the Company has invariably put the mobile battery charger in the category of an accessory which means that in the common parlance also/ the mobile battery charger is understood as an accessory. It has also been noticed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convenience or effectiveness of something else or is supplementary or secondary to something or greater or primary importance, which assists in operating or controlling or may serve as aid or accessories. Likewise, Collector of Central Excise v. Hyundai Unitech Electrical Transmission Ltd. Anr 2015 (323) E.L.T. 220(S.C.) was relied on; it was held that as windmill doors and tower doors are safety devices used as security for high voltage equipment fitted inside the tower for preventing unauthorized access, it would be sufficient to make them part of the electricity generator. Further, the court held that since the tower is held as a part of the generator, door thereof has to be necessarily a part of the generator. The assessees urged that the ratio in the said judgment would apply squarely to the facts of the present case as towers of windmill generator stand on a similar footing to the towers being used by the Appellants in the present case. Both are required to keep the equipment at the desired altitude for their respective effective use. Therefore, applying the ratio in Hyundai Unitech (supra), the towers should be held as part of the antenna and BTS. Another decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e definition of the term input as defined in 2 (k) of the Credit rules it is clear that the Appellant is a service provider and not a manufacturer of capital goods. A close scrutiny of the definition of the term capital goods and input indicates that only those goods as used by a manufacturer would qualify for credit of the duty paid. As observed hereinabove a service provider like the appellant can avail of the credit of the duty paid only if the goods fall within the ambit of the definition of capital goods as defined under Rule 2(a)(A) of the Credit Rules. The contention of the appellant that they are entitled for the credit of the duty paid 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. 43. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacture of capital goods which are further used in the factory of the manufacturer; Explanation 2 was amended by Notification No. 16/2009 CE(NT) dt. 07/07/2009. The amended text, which has been referred to by both sides, reads as follows: Explanation 2.--Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer but shall not include cement, angles, channels. Centrally Twisted Deform (CTD) bar or ThermoMechanically Treated (TMT) bar and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods. 44. From the above definition, clearly for goods to be termed capital goods , in the present set of facts, should fulfil the following conditions: 1. They must fall, inter alia, under Chapter 85 of the first schedule to the CET or must be component, parts or spares of such goods falling under chapter 85 of the first schedule to the Central Excise Tariff Act (CET); and 2. Must be used for providing output service. 45. Accordingly, all components, spares and accessories of such capital goods falling under chapter 85, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted the ratio laid down by the Bombay High Court in the case of the Bharti Airtel (supra), and Vodafone India (supra). Both those are subject matter of appeals before the Supreme Court. This court is of the opinion, with due respect to the Bombay High Court that those two judgments are contrary to settled judicial precedents, including the later view of the Supreme Court in Solid and Correct Engineering (supra). In this conclusion, it is held that the tribunal clearly erred in concluding that the towers and parts thereof and the prefabricated shelters are not Capital Goods with the meaning of Rule 2(a) of the Credit Rules. This question is answered in favour of the assessee and against the Revenue. 49. The allied question is alternatively, whether towers and shelters would qualify as inputs under Rule 2(k) of the Credit Rules. The assessees had urged that the tower (and parts thereof) and the pre-fabricated shelters would also qualify as inputs used for providing output service. This contention is based on sub-clause (ii) of clause (k) of Rule 2 (definition of input ) of the Credit Rules. They rely on Godfrey Phillips India Ltd. v. Union of India 1990 (48) ELT 508 , whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, and the definition does not stipulate that the goods should be used in or consumed in the provision of the Output service. The assessees relied on Indian Chamber of Commerce v Commissioner of Income Tax, WB AIR 1976 SC 348, while interpreting the term for it was held that: For used with the active participle of a verb means for the purpose of (See judgment of Westbury C, 1127). For has many shades of meaning. It connotes the end with reference to which anything is done. It also bears the sense of appropriate or adapted to ; suitable to purpose- vide Black s Legal Dictionary 51. It was highlighted that in the Larger Bench decision in Union Carbide India Ltd. v. CCE, Calcutta I 1996 (86) ELT 613 (Tribunal), the tribunal considered spare parts of machines to be eligible for credit as inputs under Modvat scheme. Tata Engineering Locomotive Co. ltd. v. CCE, Pune 1994 (70) ELT 70 (Tribunal) , too held that credit on the machines which are excluded is available under input category. In Oblum Electrical Industries Pvt. Ltd. v. Collector of Customs, 1997 (94) ELT 449 (SC), it was held as under: In the notification two different expressions have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handling corrosive substances in the course of manufacture. In J.K. Cotton Cotton Spinning and Weaving Mills Co. Ltd. v. Sales tax Officer, Kanpur 1997 (91) ELT 34 (SC) , it was held that if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity manufacture may, even if theoretically possible, by commercially inexpedient, goods intended for use in the process or activity will qualify for credit, was relied. The court had in that case observed that: The expression in the manufacture of goods should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would, in our judgment, fall within the expression in the manufacture of goods 53. On examination of the definition and the decisions, the court is of the considered opinion that the term all goods mentioned in Rule 2(k) of the Credit Rules would cover all the goods use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty credit, which was not allowed by the Revenue. Now, the basic requirement for eligibility of any duty credit is that the goods on which duty is paid (credit of which is claimed) should have a connection or nexus for discharging tax on output service. The credit availed on input is used for discharging tax on output service. In the present case, the duty paid MS angles, channels etc. are used in the fabrication of towers on a concrete platform. However, they are directly not involved in the provision of the telecommunication service. But inputs like MS angles and channels have gone into the making of such towers which in turn are used for providing infra-support service/ telecom service. In the present case, the duty paid items are MS Angles and Channels/ shelters brought to the site are installed/ erected and further put to use for mounting/ installing telecommunication antenna and other equipment. The assessees complained that their transactions do not involve purchase of angles, channels and beams for construction of towers at site. The entire tower and shelter are fabricated in the factories of the respective manufacturers and these are supplied in CKD condition. These are mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge that the towers, shelters and parts thereof were received in CKD condition and at the time of their receipt, they were movable goods. Therefore, the assessees are eligible to take CENVAT credit. It is argued that the definition of input service under Rule 2(l) is much wider than the definition of inputs under Rule 2(k) of the Credit Rules. Further, in terms of Rule 3 (of the Credit Rules) the assessees assert eligibility to CENVAT credit of the duty paid on all inputs and capital goods which are required for providing the output service. 58. Rule 4(1) of the Credit Rules prescribes the conditions/timing of availing CENVAT credit and allows credit on inputs after receipt in the premises of the output service provider. The assessees urged that a reading of the rules, entitles it to credit immediately on receiving the inputs irrespective of the subsequent treatment (i.e. fastening, bolting etc. whether or not resulting into an immovable property). It was argued that CESTAT failed to appreciate that any subsequent treatment of capital goods or inputs after receipt by the provider of output service is not relevant for the purpose of availing credit in terms of Rule 3 of Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. Further, it submits that the Supreme Court through various decisions has laid down the twin test of movability and marketability for the levy of duty of excise and consequently, grant of CENVAT credit. In the regard, reliance was placed on Triveni Engineers, particularly the following observations: 4. There can be no doubt that if an article is an immovable property, it cannot be termed as excisable goods for purposes of the Act. From a combined reading of the definition of immovable property in Section 3 of the Transfer of Property Act, Section 3(25) of the General Clauses Act, it is evident that in an immovable property there is neither mobility nor marketability as understood in the Excise Law. Whether an article is permanently fastened to anything attached to the earth require determination of both the intention as well as the factum of fastening to anything attached to the earth and this has to be ascertained from the facts and circumstances of each case. 61. The next decision cited was Quality Steel Tubes Pvt. Ltd. v. Controller of Central Excise, (1995) 2 SCC 372 in which the Supreme Court considered the question whether the tube mill and welding head ere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goods which are attached to the earth and thus become Immovable do not satisfy the test of being goods within the meaning of the Act nor it can be said to be capable of being brought to the market for being brought and sold. Therefore, both the tests, as explained by this Court, were not satisfied in the case of appellant as the tube mill or welding head having been erected and installed in the premises and embedded to earth they ceased to be goods within meaning of Section 3 of the Act. 6. Learned Counsel for the Revenue urged that even if the goods were capable of being brought to the market it would attract levy. True, buterection 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 eligibility to duty. 62. Sirpur Paper Mills (supra) was also cited, especially the following observations: 5. Apart from this finding of fact made by the Tribunal, the point advanced on behalf of the appellant, that whatever is embedded in earth must be treated as immovab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t substantial damage to its components and thus cannot be reassembled, then the items would not be considered as moveable and will, therefore, not be excisable goods. (vi) if any goods installed at site (example paper making machine) are capable of being sold or shifted as such after removal from the base and without dismantling into its components/ parts, the goods would be considered to be moveable and thus excisable. The mere fact that the goods, though being capable of being sold or shifted without dismantling, are actually dismantled into their components/ parts for ease of transportation etc., they will not cease to be dutiable merely because they are transported in dismantled condition. Rule 2(a) of the Rules for the Interpretation of Central Excise Tariff will be attracted as guiding factor is capability of being marketed in the original form and not whether it is actually dismantled or not, into is components. Each case will therefore have to be to decided keeping in view the facts and circumstances, particularly whether it is practically possible (considering the size and nature of the goods, capability of goods to move on self propulsion ships etc.) to remove and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor and the appellant has claimed input credit on cement and steel. The cement and steel were not included in Explanation 2 from 2004 upto March 2006. The Cenvat Credit Rules 2004 were amended in exercise of the powers conferred by section 37 of the Central Excise Act 1944 with effect from 7.7.2009, the date on which it was notified by the Central Government from the date of the notification. According to learned counsel for the appellant, this amended definition would apply only to the factory or manufacturer and would not apply to the service provider. According to him, either before the amendment made in the year 2009 or thereafter, the appellant was neither factory nor manufacturer and he has only constructed jetty by use of cement and steel for which he was entitled for input credit as jetty was constructed by the contractor, but the jetty is situated within the port area and the appellant is a service provider. According to the appellant, his case is squarely covered by the judgment of the Division Bench of the Andhra Pradesh High Court in Commissioner of Central Excise, Visakhapatnam-II Vs. Sai Sahmita Storages (P) Limited, 2011 (270) E.L.T. 33 (A.P.) wherein in paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable to the appellant as construction of jetty is exempted service. The argument though attractive cannot be accepted. The jetty is constructed by the appellant by purchasing iron, cement, grid etc. which are used in construction of jetty. The contractor has constructed jetty. There are two methods, one is that the appellant would have given entire contract to the contractor for making jetty by giving material on his end and then make the payment, the other method was that the appellant would have provided material to the contractor and labour contract would have been given. The appellant claims that he has provided cement, steel etc. for which he was entitled for input credit and, therefore, in our opinion, the appellant was entitled for input credit and it cannot be treated that since construction of jetty was exempted, the appellant would not be entitled for input credit. The view taken contrary by the Tribunal deserves to be set aside. 66. The Division Bench of the Bombay High Court in Coca Cola India Pvt. Ltd. v. Commissioner of Central Excise, Pune III, 2009 (242) ELT 168 (Bom) construed Section 2 (l) as follows: 39. The definition of input service which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is not free from tax under that head of exemption. 67. In the case of CCE, Pune v. Bellsonica Auto Components India Pvt. Ltd., 2015 (40) STR 41 (P H), the respondents manufactured metal components for automobiles and supplied the product to Maruti Udyog Limited who used them in respect of the automobiles manufactured by them. The respondents paid service tax in respect of the lease rent. Further, the respondents set up factory for which they availed the service of erection, installation and commissioning engineers who had paid the Service tax in respect of the amounts paid to them. The respondents availed CENVAT credit in respect of the said service tax paid. The question for consideration before the court was whether the said services fall within the meaning of the term input service in Section 2(l)(ii) . The respondent analyzed Section 2 (l) by dividing it into two parts terming them the mean part and the includes part and that the present case would fall under both the parts of the definition as the phraseology is wide enough to cover the said ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast so far as the payment for services rendered by the civil contractor for setting up the factory is concerned, beyond doubt. As the plain language of Section 2(l)(ii) indicates, the services mentioned therein are only illustrative. The words includes services establish the same. It can hardly be suggested that the lease rental is not for the use of the land in relation to the manufacture of the final product. 68. On the basis of the above reasoning, the Tribunal had denied CENVAT credit to the assessee on the premise that the towers erected result into an immovable property, which is erroneous and contrary to the judgment of the Supreme Court in the case of Solid and Correct Engineering (supra). The towers which are received in CKD condition, are assembled/ erected at the site subsequently giving rise to a structure that remains immovable till its use because of safety, stability and commercial reasons of use. The entitlement of CENVAT credit is to be determined at the time of receipt of goods. The fact that such goods are later on fixed/ fastened to the earth for use would not make them a non-excisable commodity when received. Therefore, this question is answered in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btedly part of the furnace which Capital Goods is. The fact that the furnace in questions was not classifiable under a particular tariff heading would not affect the fact that it is covered by the category of machines machinery etc. specified in Clause l(a) to the explanation to Rule 173Q. The bricks which form part of the furnace would therefore be eligible for credit under Clause 1(b). In the absence of any express provision to deny credit to parts of such goods Commissioner s reasoning cannot be upheld. We cannot import anything into the rule which does not exist in it. 71. Sai Sahmita Storages (P) Limited, is, in our opinion, a decision that held that a plain reading of the definition of Rule 2(k) would demonstrate that all goods used in relation to manufacture of final product or for any other purpose used by a provider of taxable service for providing an output service are eligible for CENVAT credit. 72. In the present case, it is not in dispute that the appellant is a taxable service provider providing passive telecommunication service. Therefore, the assessee is entitled for input credit on the weight of judicial authority discussed above. It is also clear that sever ..... X X X X Extracts X X X X X X X X Extracts X X X X
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