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TMI Blog2024 (11) TMI 1042X X X X Extracts X X X X X X X X Extracts X X X X ..... Visalaksh, Adv. Mr. Udit Jain, Adv. Mr. Pranav Bansal, Adv. Mr. Mahfooz Ahsan Nazki, AOR Mr. Harish N. Salve, Sr. Adv. Ms. Anuradha Dutt, Adv. Mr. Tushar Jarwal, Adv. Mr. Rahul Sateeja, Adv. Mr. Vikrant A. Maheshwari, Adv. Mr. Raghav Dutt, Adv. Ms. Pakhi Jain, Adv. Ms. B. Vijayalakshmi Menon, AOR Mr. Mahesh Agarwal, Adv. Mr. Rishi Agrawala, Adv. Ms. Sayaree Basu Mallik, Adv. Mr. Abhinabh Garg, Adv. Mr. E. C. Agrawala, AOR Mr. Arvind P. Datar, Sr. Adv. Mr. Tarun Gulati, Sr. Adv. Mr. Kumar Visalaksh, Adv. Mr. Udit Jain, Adv. Mr. Pranav Bansal, Adv. Mr. M. P. Devanath, AOR Mr. Sarad Kumar Singhania, Adv. Ms. Rashmi Singhania, AOR Mr. Yash Singhania, Adv. Mr. B. Krishna Prasad, AOR Mr. Gurmeet Singh Makker, AOR Mr. Puneet Agarwal, Adv. Mr. Yuvraj Singh, Adv. Ms. Shruti Garg, Adv. Mr. Amrendra Kumar Singh, Adv. Mr. Chetan Kumar Shukla, Adv. Mr. Santosh Kumar, AOR Mr. Rahul Bhatt, Adv. Ms. Hemlat Rawat, Adv. Mr. Harish N Salve, Sr. Adv. Mr. K. R. Sasiprabhu, AOR Mr. Vipin Jain, Adv. Ms. Shilpa Balani, Adv. Mr. Vappangi Sai Varaprasad, Adv. Mr. Bhavuk Agarwal, Adv. Mr. Raghav Shankar, Adv. Mr. Vishnu Sharma A S, Adv. Mr. Vishal Agarwal, Adv. Mr. Prakhar Agarwal, Adv JUDGMENT NONGMEIKAPA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. Commissioner of Central Service Tax) have been filed before this Court; (iii) Central Excise Appeal No.159 of 2015, out of which CA No.5112 of 2021 (Idea Cellular Ltd. vs. Commissioner of Service Tax) has arisen; (iv) Central Excise Appeal No.1 of 2016, Central Excise Appeal No.2 of 2016, Central Excise Appeal No.4 of 2016, Central Excise Appeal No.6 of 2016, Central Excise Appeal No.7 of 2016 which have been challenged in CA No.1201 of 2018 (Reliance Communications v. Commissioner of Service Tax), CA No.1205/2018 (Reliance Communications v. Commissioner of Service Tax), CA No.1203 of 2018 (Reliance Communications v. Commissioner of Service Tax), CA No.1204 of 2018 (Reliance Communications v. Commissioner of Service Tax) and the CA No.1202 of 2018 (Reliance Communications v. Commissioner of Service Tax); (v) Central Excise Appeal No.7 of 2017 rendered on 02.04.2018 which has been challenged in CA No.5832 of 2018 (M/s Reliance Communication Infrastructure v. Commissioner of Service Tax, Mumbai). 1.3 The Delhi High Court in the case of Vodafone Mobile Services Limited v. CST, Delhi 2019 [(27) G.S.T.L. 481 (Del.)] (Vodafone, for short) decided on 31.10.2018 arising out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odulating to transmitted signals. When it receives signals from other mobile stations, it performs the inverse functions. The mobile handset sends a signal, an electromagnetic wave, which is a modulated version of the user's voice or data. The signal emanating from the handset is received by the antenna mounted on the tower. Thereafter, the signal received by the antenna is sent through cables to the Base Station Sub-system (BSS). BSS is a set of base station equipment like Base Transceiver Station (BTS) and Base Station Controller (BSC). BSC essentially controls one or more BTS or BS. Base Transceiver Station (BTS) housed at the base of the tower is kept in secured and safe conditions in the prefabricated house or building (PFB). The BTS then converts the electromagnetic signal into a digital format that can be processed by the network. The processed signal is then transmitted to the mobile switching centre (MSC). The MSC then routes the calls or data to the destination through another tower or series of towers and by a reverse process of conversion from digital mode to electromagnetic wave, the signal is received at the destination. 3.1 The said activities require constant elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules as the issues dealt with by the two High Courts and before us are to be examined in the light of the provisions of the CENVAT Rules. 7.1 Rule 3(1) of the CENVAT Credit Rules, 2004 enables a provider of taxable service to claim CENVAT credit paid on any "capital goods" or "input" received in the premises of the service provider. As to what are "capital goods" and "input" have been defined under Rule 2(a)(A) and the Rule 2(k) of the CENVAT Rules. Consequently, if the mobile towers and prefabricated buildings, which are the items in issue here, qualify as "capital goods" or "inputs" received in the premises of the mobile service provider, the mobile service provider will be entitled to claim CENVAT credit which can be further used for paying service tax for the output services rendered by the mobile service provider. 7.2 While Rule 3(1) is the enabling provision for taking CENVAT credit, Rule (4) provides that the CENVAT credit in respect of "inputs" may be taken immediately on receipt of inputs in the factory of the manufacturer or in the premises of the service provider. For better clarity, we reproduce the relevant provisions of the CENVAT Rules. Rule 2(a) (A) defines "c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ............ paid on - (i) any input or capital goods received in the factory of manufacture of final product or premises of the provider of out service on or after the 10th day of September, 2004; and (ii) any output service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004. (2) ................ (3) ................ (4) ................. (5) CENVAT credit may be utilized for payment of - (a) any duty of excise of any final product; or (b) an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or after being partially processed; or (c) an amount equal to the CENVAT credit taken on capital goods if such capital goods are removed as such; or (d) an amount under sub-rule (2) of rule 16 of Central excise Rules, 2002; or (e) service tax on any output service: ................................................... ..................................................." Rule 4 "Condition for allowing CENVAT credit. 4. (1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on devices etc. and not for providing output service i.e. telecommunication service and hence, cannot be considered "capital goods" within the meaning of Rule 2(a)(A). Further, it was also alleged that these cannot be said to be "inputs" for providing mobile service within the meaning of Rule 2(k). 9.3 The response of the Assessee in respect of the said show cause notice was that towers and parts of towers are "capital goods" and "inputs" for which CENVAT credit is admissible for the output service rendered by the Assessee. 9.4 In regard to the prefabricated buildings (PFBs), the Assessee explained that these are also eligible for CENVAT credit as "capital goods" and in any case as "inputs" for providing mobile telecom service to the subscribers. It was contended that the aforesaid articles are covered within the meaning of "capital goods" under Rule 2(a)(A) and "inputs" under Rule 2(k). 9.5 It was also contended on behalf of the Assessee that credit in respect of "inputs" can be availed immediately on receipt of the goods in the premises of the service provider under Rule 4(1) of the CENVAT Rules. Thus, the Assessee was entitled to CENVAT credit the moment these articles were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd definite functions and cannot be treated as a single integrated unit and accordingly, these items/goods cannot be treated as capital goods and CENVAT credit cannot be allowed. The Revenue held that only equipment like BTS, transmitter, antenna which are used in providing telecom service and which are covered under various Chapters under Rule 2(a)(A) are eligible for CENVAT credit vide order dated 19.12.2006 of the Commissioner of Excise/Revenue. 9.9 Being aggrieved by the aforesaid order of the Commissioner, the Assessee approached the Customs Excise and Service Tax Appellate Tribunal (CESTAT) by filing Appeal No. ST/49/2007 challenging the order dated 19.12.2006. 9.10 It may be noted that after the Commissioner, Excise/Revenue rejected the plea of the Assessee by order dated 19.12.2006, another proceeding was initiated for recovery of penalty which culminated in the passing of order dated 23.03.2009 by the Commissioner which was challenged before the Tribunal in Appeal No. ST/145/2009. 9.11 The aforesaid two orders passed in the above appeals namely ST/49/2007 and the ST/145/2009 were challenged before the CESTAT which were disposed of by a common order dated 06.01.2012 upho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of Rule 3 which provides for credit on excise duty paid in discharging liability towards service tax. 9.14 The Bombay High Court, after considering the definition clauses in the CENVAT Rules, took the view that the goods in question i.e. tower and parts thereof which are fastened and fixed to the earth after their erection become immovable properties and therefore, these cannot be goods and hence not "capital goods" within the meaning of the CENVAT Rules. The Bombay High Court also took the view that the tower and parts thereof in the CKD or SKD condition, would fall under Chapter Heading 7308 of the Central Excise Tariff Act, but the aforesaid heading is not specified either in clause (i) or clause (ii) of Rule 2(a)(A) of the CENVAT Rules to be treated as "capital goods". The Bombay High Court further opined that since these 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 Rule 2(a)(A)(i), the goods in question would not be "capital goods" for the purpose of CENVAT credit. 9.15 The Bombay High Court also did not find favour with the contention of the Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Bombay High Court, however, did not find the aforesaid decisions applicable to the present case. 9.16.3 The Bombay High Court then proceeded to examine the alternate plea of the Assessee that the tower is an accessory of antenna and without towers, antenna cannot be installed and hence it cannot function, and therefore, tower should be treated as a part or component or accessory of the antenna. The contention of the Assessee was that the antenna falls under Chapter 85 of the Schedule to the Central Excise Tariff Act and is thus "capital good" within the meaning of Rule 2(a)(A)(i) and (ii), therefore, tower being an accessory of antenna, will be eligible for availing CENVAT credit under Rule 2(a)(A)(iii). Some more cases relied upon by the Assessee were as follows. (i) M/s. Annapurna Carbon Industries Co. v. State of Andhra Pradesh, (1976) 2 SCC 273. (ii) Commissioner of Sales Tax, Maharashtra State, Bombay v. L.D. Bhave & Sons, 1981 SCC OnLine Bom 438. (ii) Mehra Brothers v. Joint Commercial Officer, (1991) 1 SCC 514. The Bombay High Court on examination held these decisions not to be applicable to the present case. 9.17 The Bombay High Court then considered the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vi) Municipal Corporation of Greater Bombay v. Indian Oil Corporation, 1991 Supp (2) SCC 18. (vii) Cellular Operators Association of India & Ors. V. Municipal Corporation of Delhi etc., 2011 SCC OnLine Del 2003. (viii) Collector of Central Excise v. Hutchison Max Telecom P. Ltd., 2007 SCC OnLine Bom 702. (xi) Saraswati Sugar Mills v. Commissioner of central Excise, Delhi-III, (2014) 15 SCC 625). 9.18. The Bombay High Court after analysing the facts of the present case, in the light of the case laws cited by the contesting parties and relevant provisions of the CENVAT Rules, rejected the contention of the Assessees that they were entitled to credit of the duties paid on these items since BTS is a single integrated system consisting of tower, GSM or Microwave Antennas, PFB, isolation transformers, electrical equipments, generator sets, feeder cables etc., and these are to be treated as "composite system" classified under Chapter Heading 85.25 of the Tariff Act and hence be treated as "capital goods" and credit be allowed. The Bombay High Court held that each of the components had independent functions and, hence, these cannot be treated and classified together as a singl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the CENVAT Rules as the Assessee is a service provider and not a manufacturer of capital goods. Further since tower and PFBs are in the nature of immovable, non-marketable and non-excisable goods, these cannot be classified as "inputs" to fall within the definition Rule 2(k) of the CENVAT Rules. 9.24 In view of the aforesaid conclusions arrived by the Bombay High Court, it was held that the subject items are neither "capital goods" under Rule 2(a)(A) nor "inputs" under Rule 2(k) of the CENVAT Rules and hence CENVAT credit of the duty paid thereon was not admissible to the Assessee. Decision of the Delhi High Court 10. The proceedings before the Delhi High Court arose out of the decision rendered by the CESTAT, New Delhi against an Appeal preferred under Section 35E of the Central Excise Act, 1944 and Section 83 of the Finance Act, 1944. 10.1. The Assessee, Vodafone, provided cellular telecommunication services and paid service tax as applicable. It availed CENVAT credit on excise duty paid on towers, parts thereof and prefabricated shelter/building purchased by it for providing the output services. The credit so availed was utilized to pay service tax on the output servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a composite integrated system classifiable under Chapter 85.25 of CETA and held that these goods had independent functions and could not be classified as a single unit. It was the view of the Revenue that all capital goods are not eligible for credit but only those which are used for providing output service would be eligible for credit. Thus, only telecom equipment like BTS, transmitters which are used for providing telecom services alone would be eligible for input credit and the not the other goods as insisted by the Assessee. 10.7 The Assessee appealed to the CESTAT, by which time the Bombay High Court had already rendered its decision in Bharti Airtel (supra), in view of which two members of the Bench of the CESTAT rendered two different opinions, hence, it was referred to a larger bench of the CESTAT, which, however, accepted the contentions of Revenue by holding that goods in question were neither "capital goods" and nor "inputs", leading to the filing of the appeal before the Delhi High Court wherein the Delhi High Court decided in favour of the Assessee. 10.8 In deciding the said appeal, the Delhi High Court framed the following questions of law:- i) Whether the CESTAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are merely fastened to the civil foundation to make these wobble free and stable. It was also held that tower and PFB can be unbolted and reassembled without any damage and relocated to a new site. These are thus not permanently annexed to the earth for the beneficial enjoyment of the land of the owner as observed in para 37 of the decision of the Delhi High Court which is reproduced below: "37. On an application of the above tests to the cases at hand, this Court sees no difficulty in holding that the manufacture of the plants in question do not constitute annexation and hence cannot be termed as immovable property for the following reasons: (i) The plants in question are not per se immovable property. (ii) Such plants cannot be said to be "attached to the earth" within the meaning 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... helter support the BTS for effective transmission of mobile signals and therefore, enhance the efficiency of BTS and antenna. The towers and shelters, therefore, act as components and parts and in alternative as accessories to the BTS and antenna and thus are covered by the definition of "capital goods". 10.9.9 The Delhi High Court accordingly found fault with the Tribunal in interpreting the definition of "capital goods" and observed that the Tribunal merely adopted the ratio laid down in the case of Bharti Airtel (supra) of the Bombay High Court without proper analysis. The Delhi High Court was of the opinion that the view of the Bombay High Court in the aforesaid case of Bharti Airtel (supra) and subsequent decisions was contrary to the settled judicial precedents including in Solid and Correct Engineering (supra). 10.9.10 The Delhi High Court further examined as to whether towers and PFBs/shelters would qualify as "inputs" under Rule 2(k) of the CENVAT Rules. 10.9.11 After examining the principles laid down in Godfrey Phillips India Ltd. vs. Union of India, 1985 SCC OnLine Bom 345; Indian Chamber of Commerce vs. Commissioner of Income Tax, WB, AIR 1976 SC 348; Union Carbide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Collector of Central Excise vs. Hyundai Unitech Electrical Transmission Ltd. (2015) 17 SCC 181 and took the view that MS angles and channels have gone into making towers and shelters which in turn are used for providing infra-support services/telecom services and hence are amenable to CENVAT credit. 10.9.15 Coming to the fourth question framed by the Delhi High Court as to whether the Assessee could claim CENVAT credit on receipt of such towers and shelters at their premises, which the CESTAT had denied on the ground that upon installation, towers and shelters become immovable property and hence are not eligible for CENVAT credit as "inputs". The Delhi High Court, however, accepted the plea of the Assessee that Rule 4(1) of the CENVAT Rules allows credit on inputs on receipt in the premises of the output service provider. 10.9.16 The Delhi High Court ruled in favour of the Assessee that it is entitled to the credit immediately on receiving the inputs irrespective of the subsequent treatment i.e. by way of fastening, bolting etc. whether or not it results into an immovable property, by holding that the subsequent treatment of capital goods or inputs after receipt by the provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court held that in view of the decision in Solid and Correct Engineering (supra), even if, in the intermediate stage, an immovable structure emerges, it is of no consequence in as much as entitlement of CENVAT credit is to be determined at the time of the receipt of goods and not at a later stage. It was held that if the goods that are received qualify as "inputs" or "capital goods", the fact that they are later fixed/fastened to the earth for use would not make them non-excisable commodity when received. 10.9.22 The Delhi High Court also held that in the present case the tower and PFB shelters are not immovable property for in the event of requirement of relocation, these towers and PFB shelters can be removed and shifted to another location. 10.9.23 In the light of the aforesaid findings, the Delhi High Court held that the Assessees are entitled to seek CENVAT credit on the towers and pre-fabricated buildings (PFBs) and such other accessories. 10.10 What emerges from the above discussion is that the Bombay High Court and Delhi High Court differed fundamentally on the issue as to whether towers, parts thereof and pre-fabricated buildings, with which we are primarily concerned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bile service provider, the mobile service provider will be entitled to claim CENVAT credit which can be further used for paying service tax for the output services rendered by the mobile service provider. 11.2 In the light of the provisions of the CENVAT Rules, if it is held that towers and/or parts thereof and prefabricated buildings (PFBs) are "capital goods" or "inputs" used for providing output service within the meaning of the aforesaid CENVAT Rules, then CENVAT credit can be claimed on these items. 11.2.1 For this we will first examine the attributes of "capital goods" for if these items are to be considered "capital goods", these must first have the traits of "goods". 11.2.2 We, therefore, now focus our attention in understanding what is meant by "goods", for if these items do not qualify as goods then these obviously cannot be "capital goods" and the benefit of CENVAT credit under the Rules will not be available, since such credit is available only in respect of "goods". 11.2.3 The word "goods" has not been defined in the CENVAT Rules. Hence, we will refer to other statutes to understand its meaning. The term "goods" has been defined in an expansive manner, in the wides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 2(f): "goods" means every kind of movable property other than actionable claims and money. (viii) The Bureau of Indian Standards Act, 2016 Section 2(14): "goods" includes all kinds of movable properties under the Sale of Goods Act, 1930, other than actionable claims, money, stocks and shares; (ix) Consumer Protection Act, 2019 Section 2(21): "goods" means every kind of movable property and includes "food" as defined in clause (j) of sub-section (1) of section 3 of the Food Safety and Standards Act, 2006 (34 of 2006). 11.2.6 From the above, it appears that the definition of "goods" under the Sales of Goods Act, 1930 seems to be the basis of the term "goods" in other Statutes. Hence, we would primarily rely on the definition given in the Sale of Goods Act. 11.2.7 The items in consideration viz., towers and prefabricated buildings are neither actionable claim nor money, nor do they come within the inclusive clause of the definition, viz., stocks, shares, growing crops, grass, and things attached to forming part of the land which are agreed to be severed before sale or under contract of sale. 11.2.8 If these items are movable properties, these will be " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned under Section 3(26) of the General Clauses Act, has been explained under Section 3 of the Transfer of Property Act, 1882 to mean as rooted in the earth, as in the case of trees and shrubs; imbedded in the earth, as in the case of walls or buildings; or attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached. 11.5 For easy reference, the aforesaid definition clauses of the Transfer of Property Act, 1882 and the General Clauses Act, 1897 as may be relevant are reproduced below. Section 3(36) of the General Clauses Act. "movable property" shall mean property of every description, except immovable property; Section 3(26) of the General Clauses Act. "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. Section 3 of the Transfer of Property Act. "immovable property" does not include standing timber, growing crops or grass. Under Section 3 of the Transfer of Properties Act, "attached to the earth" means: (a) rooted in the earth, as in the case of trees and shrubs; (b) imbedded in the earth, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chment of the plant in question with the help of nuts and bolts to a foundation not more than 1½ ft deep intended to provide stability to the working of the plant and prevent vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. It is also not synonymous to imbedding in 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 also in no way comparable to attachment of a plant to a foundation meant only to provide stability to the plant especially because the attachment is not permanent and what is attached can be easily detached from the foundation. So also the attachment of the plant to the foundation at which it rests does not fall in the third category, for an attachment to fall in that category it must be for permanent beneficial enjoyment of that to which the plant is attached. It is nobody's case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o as to be immune from the levy of excise duty." 11.7.3 While deciding the said issue, the Court referred to Triveni Engineering (supra), Sirpur Paper Mills Ltd. (supra), Quality Steel Tubes (P) Ltd. (supra), Mittal Engg. Works (P) Ptd. (supra), T.T.G Industries Ltd. Vs. CCE (2004) 4 SCC 751 and examined various characteristics of the property including marketability and lack of permanency to determine whether the property in issue was movable or immovable. 11.7.4 In Triveni Engineering (supra), this Court applied the marketability test, in which it took the view that if the goods in question are capable of being taken into the market and sold, the same cannot be treated to be as immovable but movable property. This Court observed that "marketability" itself indicates movability of the property in issue. 11.7.5 This Court was of the view and thus held that if the goods that were fixed to the earth were capable of being dismantled without doing any damage or change in the nature of goods, it would indicate the "absence of permanency" and such a good cannot be deemed to be immovable property, as held in the following paragraph: "20. Further, in the instant case, it is a common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This Court rejected the plea and held that merely because the machine was attached to the earth for efficient working and wobble- free operation, it did not per se render the said property immovable since the said machine can be sold in the market. It was then observed as follows: "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 house-holder 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 component of 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n earth on their own weight without being fixed with nuts and bolts, they have permanently been erected without being shifted from placed to place. Permanency is the test. The chattel whether is movable to another place of use in the same position or liable to be dismantled and re-erected at the latter place? If the answer is yes to the former it must be a movable property and thereby it must be held that it is not attached to the earth. If the answer is yes to the latter it is attached to the earth." 11.7.10 In T.T.G. Industries Ltd. (supra), this Court also placed reliance on Quality Steel Tubes and Mittal Engineering works Ltd. (supra). This Court in T.T.G. Industries Ltd. (supra) held as follows: "27. Keeping in view the principles laid down in the judgments noticed above, and having regard to the facts of this case, we have no doubt in our mind that the mudguns and the drilling machines erected at site by the appellant on a specially made concrete platform at a level of 25 feet above the ground on a base plate secured to the concrete platform, brought into existence not excisable goods but immovable property which could not be shifted without first dismantling it and then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismantled and restored to its SKD or CKD condition and thereafter re-erected, which however, would not entail any damage to it. Thus, the present case of the mobile towers differs from the factual matrix of T.T.G. Industries Ltd. (supra). 11.7.12 Before us, the Revenue has also placed reliance on the Commissioner of Central Excise Versus Virdi Brothers and Ors., (2007) 15 SCC 24 and CCE Versus Globus Store Pvt. Ltd., (2011) 15 SCC 200, in which this Court relied on a Circular issued by the Central Board of Excise and Custom, Department of Revenue, Ministry of Finance, Government of India under No. 58/1/2002-CX dated 15.01.2002 in which it was mentioned under Clause (e) that , " (e) If items assembled or erected at site and attached by foundation to earth cannot be dismantled without substantial damage to its components and thus cannot be reassembled, then the items would not be considered as movable and will, therefore, not be excisable goods. " 11.7.13 In the present case, as discussed above, the tower has been bought and brought to the site in a semi or completely knocked-down condition and assembled and if the same is required to be re-located to another location it can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any change in the nature of the goods and can be moved to market and sold, such goods cannot be considered immovable. 11.8.1 We may summarise some of the principles applied by the Courts in the decisions referred to above to determine the nature of the property as follows: 1. Nature of annexation: This test ascertains how firmly a property is attached to the earth. If the property is so attached that it cannot be removed or relocated without causing damage to it, it is an indication that it is immovable. 2. Object of annexation: If the attachment is for the permanent beneficial enjoyment of the land, the property is to be classified as immovable. Conversely, if the attachment is merely to facilitate the use of the item itself, it is to be treated as movable, even if the attachment is to an immovable property. 3. Intendment of the parties: The intention behind the attachment, whether express or implied, can be determinative of the nature of the property. If the parties intend that the property in issue is for permanent addition to the immovable property, it will be treated as immovable. If the attachment is not meant to be permanent, it indicates that it is movable. 4. Func ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at the site by assembling the parts which also consists of MS angles and channels. The tower, after being assembled and fixed to the earth or a building can be dismantled without any change in the nature of the tower, and the tower can be removed and shifted to any other location as per the needs and requirements of the service provider and also can be re-sold in the market in the same form and hence both, the functionality and marketability tests as applied in the aforesaid cases of Solid and Correct Engineering (supra), Triveni Engineering (supra) and Sirpur Paper Mills Ltd. (supra) can be said to be fulfilled in the present case. 11.9.5 The tower is brought to the site in CKD or SKD form and assembled at the site. If it is to be dismantled, it only involves unbolting of the nuts and bolts. Dismantling the tower may entail some damages, but such damages will be on the cables which may be required to be stripped of but no damage is caused to the tower. If one says that there may be some damage caused, it will be with reference to the BTS which consists of the antenna, connected by cables and other electrical equipment. But there is no damage to the tower per se. Similarly, in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the earth as in the case of walls or buildings, or (c) attached to what is imbedded for the permanent beneficial enjoyment of that to which it is attached. Attachment of the plant in question with the help of nuts and bolts to a foundation not more than 1½ ft deep intended to provide stability to the working of the plant and prevent vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. It is also not synonymous to imbedding in 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 also in no way comparable to attachment of a plant to a foundation meant only to provide stability to the plant especially because the attachment is not permanent and what is attached can be easily detached from the foundation. So also the attachment of the plant to the foundation at which it rests does not fall in the third cate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y showing marketability, and lack of intention to make it a permanent fixture, in spite of the said property being embedded to the earth by way of fixing, the property may still be considered to be movable as has been held in many of the cases referred to above including in Solid and Correct Engineering (supra). 11.9.11 It also appears that the decision of this Court in Solid and Correct Engineering (supra) was not brought to the notice of the Bombay High Court and thus escaped consideration. The Bombay High Court without considering above-mentioned aspects proceeded on the premise that these items namely tower, its parts thereof and PFBs are immovable properties. In paragraph no. 52 of the impugned judgment, while dealing with the case of CCE Vs. Sai Samhita Storages (P) Ltd., (supra) rendered by the Division Bench of the Andhra Pradesh High Court, the Bombay High Court observed that, "The towers are admittedly immovable structures and non-marketable and non-excisable. We, therefore, are of the clear opinion that this judgment of the Division Bench of the Andhra Pradesh High Court is inapplicable in the facts of the present case." 11.9.12 We are of the opinion that the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and wobble free and that it can be relocated. 11.9.15 Reliance has been also placed by the Revenue on Quality Steel Tubes (P) Ltd. (supra) by drawing our attention to para 5 and 6 of the judgment which read as follows: "5. In several decisions rendered by this Court commencing from Union of India v. Delhi Cloth and General Mills Co. Ltd. [AIR 1963 SC 791 : 1977 ELT 199] to Indian Cable Co. Ltd. v. CCE [(1994) 6 SCC 610 : (1994) 74 ELT 22] the twin test of exigibility of an article to duty under Excise Act are that it must be goods mentioned either in the Schedule or under Item 68 and must be marketable. In Delhi Cloth Mills [AIR 1963 SC 791 : 1977 ELT 199] it having been held that the word 'goods' applies to those goods which can be brought to market for being bought and sold it is implied that it applies to such goods as are moveable. The requirement of the goods being brought to the market for being bought and sold has become known as the test of marketability which has been reiterated by this Court in CCE v. Ambalal Sarabhai Enterprises [(1989) 4 SCC 112 : 1989 SCC (Tax) 162 : (1989) 43 ELT 214] . The Court has held in Union Carbide India Ltd. v. Union of India [(1986) 2 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation materials of the customer were used and the customer sent to the appellants debit notes in regard to their value. Where the assembly and erection was done by the customer, there was no occasion for it to send to the appellants a debit note. The fact that there was no debit note in respect of one customer could not reasonably have led the Tribunal to conclude that in the case of that customer a complete mono vertical crystalliser had left the appellants' factory and that, therefore, mono vertical crystallisers were marketable. The Tribunal ought to have remembered that the record showed that mono vertical crystallisers had, apart from assembly, to be erected and attached by foundations to the earth and, therefore, were not, in any event, marketable as they were." 11.9.17 Relying on the aforesaid decisions, it has been contended by the Revenue that the tower once assembled and fixed to the earth/building, ceases to be marketable and hence cannot be said to be moveable. 11.9.18 However, as discussed above, the tower and PFBs, after being dismantled without being damaged, can be relocated or sold, thereby possessing the character of marketability. As such these decisions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. (emphasis added) The aforesaid proposition of law was reiterated in Commissioner of Central Excise, Mumbai, Vs. Hindoostan Spinning and Weaving Mills Ltd. & anr, (2009) 14 SCC 221. 11.9.22 In a recent judgment in Ranadey Micronutrients & Ors. v. Collector of Central Excise, (2022) 18 S.C.R. 28, it was held that while the departmental circulars in operation are binding upon the officers of the Revenue, to the extent it is contrary to the statute must be withdrawn by holding as follows: "15. There can be no doubt whatsoever, in the circumstances, that the earlier and later circulars were issued by the Board under the provisions of Section 37B, and the fact that they do not so recite does not mean that they do not bind Central Excise officers or become advisory in character. There can be no doubt whatsoever that after 21st November, 1994, Excise duty could be levied upon micronutrients only under the provisions of heading 31.05 as "other fertilisers". If the later circular is contrary to the terms of the statute, it must be withdrawn. While the later circular remains in operation the Revenue is bound by it and cannot be allowed to plead that it is not valid." (emphasis added) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are "capital goods", mobile tower being accessory of antenna and BTS is to be treated as "capital good" by virtue of sub-clause (iii) of Rule 2(a)(A). Similar is the case with PFBs. 11.11.2 Since, we have already held that mobile towers and PFBs are not immovable properties and can be treated as "goods", we have to examine whether these are to be treated as accessories of antenna and BTS (which are "capital goods") as claimed by the Assessees and if so, being accessory of antenna/ BTS, all these are covered within the meaning of "capital goods" under Rule 2(a)(A) (iii) and since these accessories of capital goods are used for providing output service i.e. mobile service, whether the service providers would be entitled to take CENVAT credit by virtue of Rule 3(i) of the CENVAT Rules. 11.11.3 In this regard, it is to be noted that the stand of the Revenue is that the towers and PFBs have independent functions and existence and have specific utilities and thus these cannot form part of a composite system or a single unit and hence they cannot be considered to be accessories of the antenna or BTS in contra-distinction to the plea of the Assessees that these are accessories of ant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equipment related to antenna, BTS and generator. Thus, PFBs enhance the efficacy and functioning of mobile antenna as well as BTS and accordingly, PFBs can also be considered as accessories to the antenna and BTS which are "capital goods" falling under Chapter 85 of the Schedule to the Central Excise Tariff. 11.11.7 That tower is to be treated as an accessory of antenna or BTS and their relationship has been highlighted by this Court in Tata Teleservices Ltd. Vs. Bharat Sanchar Nigam Ltd. & Ors. (2008) 10 SCC 556 wherein the principles of cellular networks have been discussed showing the inter dependency of tower and antenna in the following words, "xi) Principles of Cellular Networks: Mobile communications reached the market in 1980. Even at that time the major challenge was to implement advanced mobility features such as handover, roaming and localization of subscribers which required additional control channels between terminal and serving base station. A cellular network consists of a number of radio cells where the term "cell" refers to geographic coverage area of a BTS. The size of the coverage area depends on the signal strength of the base station and the degree o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms. On the other hand, mobile Switching and Management System is a fixed network of switching nods and databases for establishing connections from and to the mobile subscriber. HLR and VLR are two important databases which are the foundation of the Numbering Plan in MSC. The switching components are the Mobile Switching Centre ("MSC") and the Gateway MSC ("GMSC"). The MSC connects a number of BSCs. to the network for the purposes of localization and handover. Thus, it is the MSC which is responsible for serving a limited geographic region governed by all base stations connected to the MSC over their BSCs. In a mobile network, when a connection is to be established it is the MSC which determines another switch depending on the current location of the mobile subscriber. For this purpose, MSC is also connected to local network for each subscriber so as to implement the numbering plan. The area from which the call emanates, the identification of the nature of the call whether from mobile or fixed wireline is all done by the computer having the requisite software in MSC." 11.11.8 In this regard, we may also note the finding given by the CESTAT which has not been disturbed by the Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f greater or primary importance, which assists in operating or controlling the said good, and thus serves as its accessory. It was thus held in Annapurna Carbon Industries Co. (supra) that, "10. We find that the term "accessories" is used in the schedule to describe goods which may have been manufactured for use as an aid or addition. A sense in which the word accessory is used is given in Webster's Third New International Dictionary as follows: "An object or device that is not essential in itself but that adds to the beauty, convenience, or effectiveness of something else." Other meanings given there are: "supplementary or secondary to something of greater or primary importance", "additional", "any of several mechanical devices that assist in operating or controlling the tone resources of an organ". "Accessories" are not necessarily confined to particular machines for which they may serve as aids. The same item may be an accessory of more than one kind of instrument." 11.11.10 Thus, in our opinion, the restricted meaning of accessory given by the CESTAT and not differed from by the Bombay High Court is not wholly correct in as much as the meaning of accessory can ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utput service on or after 10th September, 2004 and this may be utilised for payment of service tax on any output service under Rule 3(1) read with Rule 3(4) of the CENVAT Rules. 11.12.1 "Input" has been defined under Rule 2(k) to mean all goods used for providing any output service. We have already held that tower and the prefabricated buildings (PFBs) are not immovable property but are "goods"/ "capital goods" within the meaning of Rule 2(a)(A)(iii) and since these are used for providing output service, i.e. mobile service, these can be considered to be "inputs" within the meaning of Rule 2(k) and CENVAT credit can be availed in respect of these goods for payment of service tax. The aforesaid definition clause under Rule 2(k) neither puts any condition on it nor any qualifying words have been added to the word "input", except to mean goods used for providing any output service. Hence, it would mean any "good" which is used as "input" for providing taxable output service. Thus, any item so long it qualifies as a "good" and is "used" for providing output service, would come within the purview of "input" under Rule 2(k) and excise duty paid on such items can be claimed as CENVAT cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(k) when it relates to providing output service it has been simply defined as all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and the motor vehicles used for providing any output service. However, when the word "input" is defined relating to manufacture of product, it has been defined in a broad and expensive manner to mean all goods except light diesel oil, high speed diesel oil and motor vehicle spirit commonly as petrol, (i) used in or in relation to the manufacture of final products, (ii) whether directly or indirectly, (iii) whether contained in the final product or not, (iv) and includes lubricating oils, greases, cutting oils, coolants, accessories of the final product cleared along with the final products, (v) 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, (vi) or for any other purpose, within the factory of production. Thus, "input" in relation to manufacturing of final product would mean not only those which are directly used but also indirectly used not only for manufacture of final product whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not directly connected with the manufacturing process of yarns, yet these were considered to be machineries for use in the manufacture of yarn. The said finding by the Gujarat High Court was based on the essentiality of the humidifiers. By applying the same principle in the present case, towers and PFBs though themselves are not electrical equipment, are essential for proper functioning of antenna. Thus tower being essential to rendering of output service of mobile telephony, these items certainly can be considered to be "inputs" akin to antenna. Without the towers and the PFBs, there cannot be proper service of mobile telecommunication. Hence, these certainly would come within the definition of "input" under Rule 2(k)(ii). 11.12.5 What we have noted also is that the CESTAT rejected the plea of the Assessee that towers and parts thereof are inputs under Rule 2(k) by observing that the towers are admittedly immovable structures and hence ipso facto non-marketable and non-excisable and these do not lead to manufacture of goods and that towers and PFBs certainly are not used for providing mobile services. By relying on Explanation-2 to Rule 2(k) which provides that input includes goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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