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2017 (1) TMI 1283 - CESTAT AHMEDABAD

2017 (1) TMI 1283 - CESTAT AHMEDABAD - TMI - CENVAT credit - towers, towers parts, pre-fabricated buildings/shelters - whether the Appellant, a service provider of output service viz. Telecom service is eligible to avail CENVAT Credit on various inputs viz. tower and tower parts, pre-fabricated buildings/shelters? - Held that: - following the law laid down by the Hon'ble Bombay High Court in Bharati Airtel Ltd. case [2014 (9) TMI 38 - BOMBAY HIGH COURT] which is applicable to the facts and circu .....

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2011, ST/582/2011, ST/690/2011, ST/413/2012 - A/10139-10147/2017 - Dated:- 20-1-2017 - Dr. D.M. Misra, Member (Judicial) And Mr. Ashok K. Arya, Member (Technical) Shri Jigar Shah, Advocate for the appellant Shri J. Nagori, A.R. for the Respondent-Revenue ORDER Per Dr. D. M. Misra As all these appeals filed against respective OIOs/OIAs are involving common issues, these are taken up together for disposal. 2. Briefly stated facts of the case are that the appellants M/s Fascel Ltd. (later known as .....

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y of the Cenvat credit alleging that these towers, towers parts, pre-fabricated buildings/shelters do not fall under the scope of definition of inputs as defined in Rule 2(k) of CENVAT Credit Rules, 2004; also tower and other materials being immovable in nature cannot be considered as goods and consequently, inputs. On Adjudication, the demands were confirmed and penalties imposed. 3. Similarly, various demand notices were also issued and confirmed against M/s Bharat Sanchar Nigam Limited for th .....

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Court has been decided in favour of the assessee reported as Mundra Ports and Special Economic Zone Limited Vs. Commissioner of Central Excise and Customs 2015 (39) S.T.R. 726(Guj.). It is his contention that even if the Hon ble Bombay High Court has decided the issue in Bharti Airtel Ltd. Vs. CCE, Pune-III - 2014 (35) STR 865 (Bom.) in favour of the Revenue, but since there is a decision of the jurisdictional High court on similar issue, and in case of conflict, the jurisdictional High Court&# .....

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eversed by Hon'ble Gujarat High Court. Thus, the principle laid down by Hon'ble Gujarat High Court, ought to be applied to the present case; accordingly, the Appellants are eligible to CENVAT Credit of duty paid on tower/tower parts and pre-fabricated buildings and shelters. Rebutting the argument of the Revenue in view of the Hon'ble Bombay High Court's judgment in Bharti Airtel Ltd.'s case the CENVAT Credit on tower/tower parts and pre-fabricated buildings/shelters is not a .....

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therein is squarely applicable to the facts in issue before the High Court. It is his contention that since the Hon'ble Gujarat High Court in Mundra Port's case has specifically held the issue in favour of the Asessee, hence, the principle laid down by the jurisdictional High Court ought to be followed by the Tribunal instead of the ratio laid down in Bharati Airtel's case. 6. The learned Advocate further submitted that any input which is used for providing output service, namely Tel .....

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eligible to procure the inputs like tower, tower parts for providing Telecom service at concessional rate of sales tax under Form-C, as the Assessee was providing passive telecom infrastructure services. It is his argument that answering the question in favour of the assesse,, it has been held by the Hon'ble Andhra Pradesh High Court that towers, tower parts and pre-fabricated building/shelters are used for providing output service of telecommunication services. In the present case also, th .....

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limitation as the Appellant, a Public Sector Undertaking, have not availed CENVAT Credit by indulging in suppression of facts or mis-declaration with intention to evade payment of duty. Hence, the extended period of limitation cannot be invoked. 7. Per contra, learned Authorized Representative Shri J. Nagori for the Revenue argued that the issue is no more res integra. It is his contention that involving same items, in the context of providing the same output service, the Hon ble Bombay High Co .....

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od on proper analysis of the facts and considering the nature of binding precedent. It is his contention that the facts and issues involved in Mundra Port's case were altogether different. In that case, credit was availed on cement and steel in providing port service which was sought to be recovered by the department, but in the present case the dispute arose on tower and tower material, in providing telecom service, totally different items and different context. In passing the judgment, the .....

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a Port's case, the Hon ble Gujarat High Court had examined the eligibility of the credit on cement & steel in the light of the Explanation-2 inserted into Rule 2(k) of CENVAT Credit Rules,2004 with effect from 07.07.2009, which excludes cement and steel form the scope of inputs. Further, it is his contention that the Hon ble High Court had examined the retrospective operation of the said amendment and also rejected the department's stand on disallowing the credit on cement and steel .....

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., hence, it is applicable to the present set of Appeals. 9. Responding to the argument that in case of conflicting views/judgments of two different High Courts, the Tribunal is bound by the judgment of the jurisdictional High Court, the learned Authorized Representative emphasized that before applying the said principle, first it is necessary to examine and ascertain whether there is at all any conflict in the judgments on the very same issues/facts. In the present case, there is no conflict at .....

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10. Further the learned Authorized Representative submitted that the Hon ble Supreme Court in the case of Collector of Central Excise Vs. Alnoori Tobacco Products [2004 (170) ELT 135 (SC) and Padma Sundra Rao & Others Vs State of Tamil Nadu & Others - (2002) 3 SCC 533 has laid down the principle of adopting a binding precedent. Applying the said principle, and adhering to the judicial disipline the Appeals are liable to be rejected. 11. Heard both sides, gone through the written submiss .....

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rs/tower parts, prefabricated buildings/shelters cannot be considered as input to be admissible to CENVAT Credit. The Appellants, on the other hand, even though fairly accept that the judgment of Hon'ble Bombay High Court in Bharti Airtel's case is against them, submit that the jurisdictional Hon'ble Gujarat High Court in Mundra Port's case, recorded a different reasoning/principle in allowing CENVAT Credit on inputs viz. cement and steel used in the construction of jetty in prov .....

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ble Mumbai High Court and that of Hon'ble Gujarat High Court as the facts and circumstances in both cases are totally different. Therefore, the judgment in Mundra Port's case should not be blindly adopted/followed and made applicable to the present facts. The learned Authorized Representative for the Revenue placed reliance on the judgment of Hon'ble Supreme Court in in Alnoori Tobacco Products case in advancing their argument. It is relevant to visit the ratio laid down in Alnoori T .....

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en stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. v. Horton (1951 AC 737 at p. 761), Lord Mac Dermot observed : The matt .....

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tion in new circumstances. Megarry, J in (1971) 1 WLR 1062 observed: One must not, of course, construe even a reserved judgment of Russell L.J. as if it were an Act of Parliament. And, in Herrington v. British Railways Board [1972 (2) WLR 537] Lord Morris said : There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case. 13. Circu .....

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es, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive. *** *** *** Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to .....

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d justified in holding that the appellant was not entitled to credit of duty paid on tower parts, green shelter, printers and office chairs 2. Whether in the facts and circumstances of the case, the Appellate Tribunal was correct and justified in holding that the appellant was not entitled to credit of duty paid on tower parts, green shelter on the ground that tower/green shelter is "immovable property" and hence, do not qualify as "capital goods" or inputs as defined under t .....

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give rise to the following substantial questions of law : (a) Whether in the facts and circumstances of the case the Tribunal has erred in law by adding an additional condition through interpretation in Rule 2(k) of the Cenvat Credit Rules, 2004 being that the goods that are used for providing output services should not be embedded in earth (b) Whether the Tribunal has erred in law in interpreting Rule 2(k) of the Cenvat Credit Rules, 2004 which clearly provides that all goods used for providing .....

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the case, the Hon ble Appellate Tribunal was correct and justified in applying the ratio of the Bharti Airtel Ltd. in disallowing the credit to the appellant when the said decision is distinguishable on various counts as argued before the Hon ble Appellate Tribunal (e) Whether the Tribunal committed a fundamental error in not appreciating that shelter/parts of tower and the tower would qualify as inputs under the scheme of the Cenvat Credit Rules, 2004 which are integral to the provision of out .....

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s (in CKD and SKD form), parts of tower/shelter would qualify as components, parts and accessories of goods falling under Chapter 85 (h) Whether in the facts and circumstances of the case the Hon ble Appellate Tribunal erred in not appreciating that for the purposes of availing credit under the Cenvat Credit Rules, towers (in CKD and SKD form) and parts of the towers were goods when received and credit was taken and it is immaterial whether the same were erected later (i) Whether the Hon ble App .....

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s/shelters are not lost merely when they are embedded in the earth prior to use and continue to qualify as inputs under Rule 2(k) of the Cenvat Credit Rules, 2004 (l) Whether the Tribunal erred in law in appreciating that there is no embargo under Rule 2(k) of the Cenvat Credit Rules, 2004 in relation to the manner in which goods ought to be used for providing any output service and therefore, even upon installation as a part of an overall system they can qualify as inputs for rendition of outpu .....

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t immovable property (o) Whether the fact finding of the Tribunal is perverse insofar as it failed to appreciate that Towers and pre-fabricated buildings/shelters under common trade parlance are regarded as goods and, therefore, credit will be allowed on such Towers and pre-fabricated buildings/shelters under the Cenvat Credit Rules, 2004 as either capital goods or inputs (p) Whether the Tribunal failed to appreciate that Towers and prefabricated buildings/shelters in common trade parlance are k .....

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course of its business, it is required to set up various equipments which are integral to, and used for providing such services. Such equipments are essential and an integral part of the telecom service delivery across the world and is the backbone of the telecom service. Such infrastructure includes public switching equipment, transmission equipment and various customer premises equipment. At the heart of the whole infrastructure is the Base Transreceiver Station (BTS) which facilitates wirele .....

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ervice tax paid on input services used for providing output service, and utilised the same for discharging their output service tax liability. The appellant had inter alia availed of Cenvat credit for duty paid on towers (in CKD/SKD form), parts of towers, shelter/pre-fabricated buildings purchased by them and used for providing output service. 14. On the other hand, the Hon'ble Gujarat High Court in Mundra Port's case (supra) formulated the question of law as follows:- 4. This Tax Appea .....

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se Notices were issued to them wherein the assessee was asked to show cause as to why credit of the Excise duty paid on the cement and steel used in the construction of new jetties and other commercial buildings should not be denied to them". 16. On a meticulous comparison of the facts & circumstances and consequent question(s) of law framed by Hon'ble Bombay High Court and Hon'ble Gujarat High Court, we have no hesitation to arrive at the conclusion that the facts in the presen .....

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ing reliance on a decision is not proper. Consequently, we do not find merit in the contention of the learned Advocate for the Appellants that the ratio laid down in Bharati Airtel's case by Hon'ble Bombay High Court is in conflict with the judgment of Hon'ble Gujarat High Court in Mundra Port's case, for the apparent reason these judgments are delivered under different factual matrix and circumstances and thus the questions of law framed under Section 35G of CEA,1944 in the said .....

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for normal period and since the issue involved is a pure question of interpretation of law, in our opinion, imposition of penalty is unwarranted and accordingly set aside. 18. In relation to the Appeals filed by M/s BSNL, it is claimed that the demands in Appeal Nos.ST/307/2010, ST/436/2011, ST/488/2011 & ST/690/2011 are barred by limitation. It is submitted that they are Public Sector Undertaking and no facts had been suppressed or mis-declared with intent to evade payment of duty. We find .....

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