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TMI Blog2023 (2) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... rred 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. The appellant was also entitled to take CENVAT credit since the items in dispute are capital goods . The order dated 30.09.2016 in so far as it confirms the demand for the normal period of limitation is, accordingly, set aside - as the demand has been set aside on merits, the issue of extended period of limitation also dismissed. Appeal allowed. - SERVICE TAX APPEAL NO. 50094 OF 2017 AND SERVICE TAX APPEAL NO. 50275 OF 2017 - FINAL ORDER NO’s. 50151-50152/2023 - Dated:- 14-2-2023 - MR. DILIP GUPTA, PRESIDENT AND MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Shri Harshvardhan, Authorized Representative for the Appellant Shri B.L. Narasimhan and Ms. Poorvi Asati, Advocates for the Respondent ORDER This appeal has been filed by M/s. ATC Telecom Infrastructure Private Limited [the appellant] (earlier known as M/s. ATC Telecom Tower Corporation Pvt. Ltd.) for setting aside the order dated 30.09.2016 passed by the Commissioner adjudicating the six show cause notices. The Commissioner denied CENVAT cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re used to construct immovable property and hence, credit thereon is not admissible. The impugned order has, however, dropped the demand with respect to extended period of limitation. 5. The issue involved in the present appeal is about denial of CENVAT credit availed and utilized on inputs, input services and capital goods used for setting up of passive infrastructure for provision of Business Support Services [BSS]. 6. Service Tax Appeal No. 50094 of 2017 has been filed by the appellant to assail the order dated 30.09.2016 so far as it confirms the demand of CENVAT credit for the normal period of limitation and has also confirmed the demand of CENVAT credit in respect of input services on the ground that the said services are used to contract immovable property enhanced credit thereon is not admissible. 7. Service Tax Appeal No. 50275 of 2017 has been filed by the department to assail the order dated 30.09.2016 to the extend it has dropped the demand with respect to the extended period of limitation. 8. Shri B.L. Narasimhan, learned counsel for the appellant assisted by Ms. Purvi Asati submitted that the items in question are movable goods received in CKD cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is something repugnant in the subject 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. 15. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the intention as well as the factum 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) 17. 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 operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a frame it is capable of being unbolted 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 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 insta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Appeal No. 86623 of 2021 decided on 18.04.2022] and it was held that towers and shelters would not be immovable property. 21. In this connection, reliance can also be placed on the following decisions: (i) M/s. Vodafone Mobile Services Limited vs. Commissioner of Central Excise, Jodhpur-(Raj.) [2022 (10) TMI 581 - Cestat New Delhi]; (ii) M/s. Bharti Airtel Limited. vs. CCE ST- Gurgaon-II [2019 (11) TMI 1162-Cestat Chandigarh]; (iii) M/s. Bharti Infratel Ltd. vs. Commissioner of Service Tax, Delhi-IV [2019-TIOL-3338-CESTAT-CHD]; (iv) Commissioner of Central Excise and Service Tax-Gurgaon vs. Bharti Infratel Ltd. [ 2019 (2) TMI 1736 Cestat Chandigarh]; (v) Bharti Airtel Ltd. vs. Commissioner of Central Excise and Service Tax, Gurgaon-II [2019-TIOL-3355-CESTAT-CHD]; (vi) M/s. Indus Towers Ltd. vs. Commissioner of Central Excise Service Tax, Delhi-IV [2020-TIOL-886-CESTAT-CHD]; (vii) Bharti Hexacom Limited vs. Commissioner of Central Excise and Customs, Central Goods and Service Tax, Jaipur-I [2021 (52) GSTL 62 (Tri.- Del.)]; (viii) M/s. Bharti Airtel Limited vs. Commissioner of Central Excise, Customs Service Tax, Cochin [2021-VIL-4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(k) of the Credit Rules. The CESTAT has erred in holding that there is no nexus between the inputs and the output service. The CESTAT also failed to consider the decision of the AP High Court in case of M/s. Indus Towers Ltd. v. CTO, Hyderabad - (2012) 52 VSR 447, which clearly ruled that the towers and shelters are indeed used and are integrally connected to the rendition of the telecommunication services. (emphasis supplied) 24. Another alternative submission advanced by the learned Counsel for the appellant that the items in dispute are capital goods and, therefore, credit was correctly taken as capital goods also deserves to be accepted. 25. The Delhi High Court in Vodafone Mobile Services had also examined this issue and the observations are as follows: 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present cases, the Tribunal, in this Court s view erred in interpreting the definition of capital goods . It merely adopted 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. (emphasis supplied) 26. Thus also, the appellant was also entitled to take CENVAT credit since the items in dispute are capital goods . 27. The order dated 30.09.2016 in so far as it confirms the demand for the normal period of limitation is, accordingly, set aside and Service Tax Appeal No. 20094 of 2017 is allowed. 28. In this view of the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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