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TMI Blog2025 (2) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... for proper functioning of antenna. Thus, tower being essential for rendering of the output service of mobile telephony, these items certainly can be considered to be "inputs" akin to antenna. It is further observed that without the towers and the pre-fabricated buildings (PFBs), there cannot be proper service of mobile telecommunication. Hence, these certainly would come within the definition of "input" under Rule 2 (k)(ii) of CENVAT Rules.
Conclusion - Towers and shelters are not immovable property and qualify as "inputs" and "capital goods" under the Cenvat Credit Rules, 2004.
Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ized either as capital goods or inputs and accordingly, it was proposed to disallow the CENVAT credit of Rs. 14,93,15,569 under Rule 14 of the CENVAT Rules, read with Section 73 of the Finance Act, 1994. The said notice proposed to charge interest under Section 75 of the Finance Act, 1994 and imposition of penalty under Rule 15 of the CENVAT Rules read with Section 78 of the Act. 5. The contention of Excise Department was that the activity of erection/fabrication of towers does not amount to manufacture. Tower materials received by the assessee and used for erection/fabrication of tower cannot be considered as inputs. Similarly, the shelters and shelter accessories do not have any nexus with telecom service since these are used for housing/storage of generator sets and other equipments. Thus CENVAT credit availed and utilized on these goods by the assessee in contravention of Rule 3 of the CENVAT Credit Rules, 2004, read with Rule 6 of the Service Tax Rules 1994 amounted to evading payment of service tax to the tune of Rs. 14,93,15,569/-. 6. The appellant M/s. Bharti Airtel Ltd., replied to the said notice denying and disputing the allegations made therein. 7. Thereafter, the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y can be considered to be "inputs" akin to antenna. It is further observed that without the towers and the pre-fabricated buildings (PFBs), there cannot be proper service of mobile telecommunication. Hence, these certainly would come within the definition of "input" under Rule 2 (k)(ii) of CENVAT Rules. 12. We have considered the submissions made on behalf of the learned counsel appearing for the parties and have also gone through the decision of the Hon'ble Supreme Court rendered in M/s. Bharti Airtel Ltd. Vs. The Commissioner of Central Excise, Pune] (supra). Relevant portions of the decision rendered by the Hon'ble Supreme Court rendered in M/s. Bharti Airtel Ltd. Vs. The Commissioner of Central Excise, Pune] (supra) are reproduced hereunder: "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 have different ascribed meanings as observed in the aforesaid decision. 11.11.11 There is no dispute to the fact that BTS is a composite system consisting of the transmitter, receiver, antenna and other equipment, and antenna can be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 credit which may in turn be used for payment of service tax for the output service provided by the MSPs. 11.12.2 It may be also noted that there must be "use" of such goods to qualify as "inputs". With ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hicles 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 contained in the final product or not but also used in relation to manufacture of final product or for any of other purpose. However, as mentioned above when "input" has been defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 nonmarketable 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 goods used in the manufacture of capital goods which are further used in the factory of the manufacturer, the CESTAT held that these items are not inputs. However, in our view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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