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TMI Blog2022 (10) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... y - This issue was also examined at length by a Division Bench of the Tribunal in M/S. RELIANCE JIO INFOCOMM LTD. VERSUS ASSISTANT COMMISSIONER, CGST CENTRAL EXCISE, BELAPUR-IV DIVISION [ 2022 (4) TMI 1361 - CESTAT MUMBAI] and it was held that towers and shelters would not be immovable property - Thus, in view of the factual position and the decisions referred, the towers and shelters would not be immovable property. Whether towers and shelters would also qualify as inputs under rule 2(k) of the 2004 Rules or not - HELD THAT:- Reliance placed in the judgement of Vodafone Mobile Services [ 2018 (11) TMI 713 - DELHI HIGH COURT] where it was held that The towers in CKD condition are used for the purpose of supplying the service and therefore, would qualify as inputs . There is actual use of the tower and shelters in conjunction with the Antenna and the BTS equipment in providing the output service, which also includes provision of the Business Support Service. Whether the items in dispute are capital goods and, therefore, credit was correctly taken as capital goods also deserves to be accepted or not? - HELD THAT:- The Delhi High Court in Vodafone Mobile Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating the twelve show cause notices by confirming the denial of CENVAT credit on inputs, input services and capital goods used by the appellant for provision of telecommunication services. 2. The details of the twelve show cause notices and the period involved are as follows : S. No. Show Cause Notice Period 1 07.04.2006 October, 2004 to September, 2005 2 20.04.2007 October, 2005 to March, 2006 3 16.10.2007 April, 2006 to March, 2007 4 13.10.2008 April, 2007 to March, 2008 5 23.09.2009 April, 2008 to March, 2009 6 14.10.2010 April, 2009 to March, 2010 7 13.10.2015 April, 2010 to March, 2014 8 19.04.2016 April, 2014 to March, 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition to render any output service to the customers; (iii) The eligibility of the appellant to avail credit is to be determined at the time of receipt of goods in terms of rule 4(1) of the 2004 Rules. So long as such goods received are used for provision of output services, the appellant would be eligible to avail CENVAT credit. Thus, immovability is not a criterion for determining the eligibility to avail CENVAT credit. This is more so, when the appellant is also engaged in providing business support services by providing the telecom infrastructure to fellow telecommunication companies; (iv) The finding that towers are immovable in nature is factually incorrect; (v) The exclusion clause under rule 2(k) of the 2004 Rules is not applicable to the present case; (vi) CENVAT credit is admissible to the appellant, irrespective of whether goods/services are received in registered or other premises; (vii) The above issue stands decided in favour of the assesse by Delhi High Court in appellant s own case in Vodafone Mobile Services Limited v. CST, Delhi [2018-TIOL-2409-HC-DEL-ST]. Reliance has been placed on a Larger Bench decision of the Tribunal in CCE, Chandigarh vs Kas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submissions advanced by the learned counsel for the appellant and the learned special counsel appearing for the Department have been considered. 9. In order to appreciate the contentions advanced on behalf of the appellant and the respondent, it would be useful to examine the definition of capital goods and input under rule 2(a) and rule 2(k) respectively, of the 2004 Rules. 10. Capital goods have been defined in rule 2(a) and the relevant portion is as follows: 2(a) capital goods means :- (A) the following goods, namely :- (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 and wagons of sub-heading 860692 of the First Schedule to the Excise Tariff Act; (ii) pollution control equipment; (iii) components, spares and accessories of the goods specified at (i) and (ii); (iv) moulds and dies, jigs and fixtures; (v) refractories and refractory materials; (vi) tubes and pipes and fittings thereof; (vii) storage tank, and (viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject or context, immovable property would not include standing timber, growing crops or grass. Section 3(26)of the General Clauses Act, 1897, provides that 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. The term attached to the earth has not been defined in the General Clauses Act, 1897 but section 3 of the Transfer of Property Act defines the expression attached to the earth to mean: (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 beneficial enjoyment of that to which it is attached. 16. The permanency test was examined at length by the Supreme Court in Commissioner of Central Excise, Ahmedabad vs. Solid Correct Engineering Works [2010 (252) E.L.T. 481 (S.C.)]. In this case the Supreme Court drew a distinction between machines which by their very nature are intended to be fixed permanently to the structures embedded in the earth and those machines which are fixed by nuts and bolts to a foundation not because the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fastening have to be ascertained from the facts and circumstances of each case and the relevant portion of the judgment is reproduced below: 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 requires 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. (emphasis supplied) 18. It would also be relevant to refer to the decision of the Supreme Court in Sirpur Paper Mills Ltd. vs. Collector of Central Excise, Hyderabad [1998 (97) E.L.T. 3 (S.C.)] wherein the Supreme Court observed that merely because a machine is attached to earth for more efficient working and operations it would not per se become immovable prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lted and being shifted from that place. It is then capable of being sold. Under these circumstances it could not be said that the generating sets manufactured by the Appellants are immovable property. (emphasis supplied) 19. The Delhi High Court in Vodafone Mobile Services had also examined whether the towers, shelters and accessories used by the appellant were immovable property and in this connection, after referring to the decision of the Bombay High Court in Bharti Airtel Ltd., on which reliance was placed by the Department, observed as follows: 36. In view of this Court, in the facts of the present case, the permanency test has to be applied, in the context of various objective factors and cannot be confined or pigeonholed to one single test. In the present case, the entire tower and shelter is fabricated in the factories of the respective manufacturers and these are supplied in CKD condition. They are merely fastened to the civil foundation to make it wobble free and ensure stability. They can be unbolted and reassembled without any damage in a new location. The detailed affidavit filed by the assessees demonstrate that installation or assembly of towers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 18.04.2022] and it was held that towers and shelters would not be immovable property. 21. Thus, in view of the factual position and the decisions referred to above, the towers and shelters would not be immovable property. 22. The alternative argument of learned counsel for the appellant that towers and shelters would also qualify as inputs under rule 2(k) of the 2004 Rules was also examined by the Delhi High Court in Vodafone Mobile Services and it was held that : 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 used for providing output services, except those which are specifically excluded in the said Rule. Therefore, the definition is wide enough to bring all goods which are used for providing any output service . Further, from the decisions of the Supreme Court and other judgments referred to previously, the test applicable for determining whether inputs are used in the manufacture of goods is the functional utility test. If an item is required for providing out the output services of the service provider on a commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Chapter 85, would also be treated as capital goods. Now, given that Cenvat credit is available to accessories, it is important to address whether towers and shelters would qualify as accessories . Black s Law dictionary, (fifth edition), defines accessory as: anything which is joined to another thing as an ornament or to render it more perfect, or which accompanies it, or is connected with it as an incident, or as subordinate to it, or which belongs to or with it, adjunct or accompaniment. A thing of subordinate importance. Aiding or contributing in secondary way of assisting in or contributing to as a subordinate. 46. On the basis of the above analysis, it is apparent that the primary test to qualify as an accessory is whether does the item in question adds to the beauty, convenience or effectiveness of something else. An accessory is an article or device that adds to the convenience or effectiveness of but is not essential to the main machinery. It was highlighted during the hearing of the appeals that the towers are structures installed to support GSM and microwave antennae. These antennae receive and transmit signals and are used for providing output servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g views have been expressed by the Delhi High Court in Vodafone Mobile Services and the Bombay High Court in Bharti Airtel Ltd. A Larger Bench of the Tribunal in Kashmir Conductors has considered which decision should be relied upon when conflicting views have been expressed by High Courts and it was held : In case the conflict of decisions among High Courts does not relate to vires of any provision or Notification, it has been held that the Tribunal has to proceed in accordance with the decision in Atma Steels P. Ltd. in the light of the decision of Supreme Court in the East India Commercial Company case i.e. where the jurisdictional High Court has taken a particular view on interpretation or proposition of law, that view has to be followed in cases within such jurisdiction. 28. It would be seen from the aforesaid decision of the Larger Bench of the Tribunal that when a Jurisdictional High Court has expressed any view in regard to the issue and conflicting views have been taken by High Courts, other than the Jurisdictional High Court, then the Tribunal will follow the jurisdictional High Court. 29. What also needs to be noticed is that the judgment of the Bombay High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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