TMI Blog2015 (2) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... and considering various case laws, came to a conclusion that Cenvat credit cannot be availed by the appellant therein either under the category of capital goods or inputs on the towers or pre-fabricated buildings - the issue is now squarely covered by the decision of the jurisdictional High Court, which is binding on us and is in favour of Revenue. The confirmation of demand of ineligible Cenvat credit and interest thereof on towers and pre-fabricated buildings within the limitation period are upheld in respect of all the appellants. Extended period of limitation - Held that:- The issue of availment of Cenvat credit on the towers and pre-fabricated buildings and shelters was being disputed before the various forum and hence all the appellants could have entertained a bonafide belief that they were eligible to avail Cenvat credit of duty paid on towers and pre-fabricated buildings/shelters - extended period of limitation should not be invoked - Demand of ineligible Cenvat credit which is confirmed along with interest, by invoking extended period is set aside in respect of all the appellants. Penalty - Held that:- As the issue was of are interpretative nature i.e., as to el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ications be allowed. 4. Learned DR objected to taking on record the additional evidences and grounds of appeal at this stage. 5. After giving due consideration to the submissions made by both the sides and on perusal of the additional evidences, the appellants/applicants wants to rely upon, we find that these additional evidences may be of help to the bench for coming to a conclusion on the entire issue. Accordingly, we allow the applications for bringing on record the additional evidences and will address to them in this order subsequently. 6. M/s. Tata Teleservices Ltd., (hereinafter referred to as TTL), M/s. Vodafone India Ltd., (hereinafter referred to as VIL), M/s. Idea Cellular Ltd., (hereinafter referred to as ICL), M/s. Vodafone Essar Ltd., (hereinafter referred to as VEL), M/s. Reliance Telecom Ltd., (hereinafter referred to as RTL) and Reliance Communications Ltd., (hereinafter referred to as RCL) have filed the following stay petitions and appeals: S. No. Miscellaneous Application No./Stay Application No. Appeal No. Name of the party 01 ST/MA/(Ors)/92633/15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and goods other than towers, pre-fabricated buildings and shelters availed during the period April 2004 to March 2011 to be considered as ineligible and be not demanded along with interest and also directed them to show cause as to why penalties be not imposed on them. One of the show-cause notices was invoking extended period while other two show-cause notices are issued for the demands within the limitation period. The said show-cause notices were issued on scrutiny of Cenvat credit accounts maintained by M/s. TTL. It was noticed by the authorities that M/s. TTL has availed Cenvat credit under capital goods and subsequently under the inputs. M/s. TTL were informed that they are ineligible to avail the said Cenvat credit in response to which M/s. TTL defended their action due to which the lower authorities came to a conclusion that M/s. TTL had deliberately avoided in furnishing the details and mis-declaring about the eligibility to avail Cenvat credit on capital goods/inputs. The appellant, M/s. TTL contested the issue on merits, limitation and also put in various alternative submissions. 8.2 M/s. VIL M/s. VEL were also issued show-cause notices dated 31/03/2009, 22/04/2010, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submit that provisions of Rule 2 wherein the definition of capital goods and the definition of inputs, are more important. He would submit that the plain reading of Rule 2 (k) (ii) of the inputs as well as Rule 2 (a) of the capital goods definition would indicate that Cenvat credit of duty paid on the item is available for the assessee, who is providing taxable output services. He would submit that the definitions are wide in scope and simple and there is no ambiguity. He would submit that the appellants have claimed the Cenvat credit on the towers, pre-fabricated buildings and shelters as they are utilised by them for providing output service, i.e., telecom services. He would also submit that the appellant shares the infrastructure facilities as per statutory requirements with other telecom service providers and charged them some amount, which has been brought under service tax under the category of business auxiliary service and business support service. It is his submission that the infrastructure is used by the appellants for business support service or business auxiliary service for which the tax is discharged, hence Cenvat credit should not be denied. He would then submit tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated in CCR; condition of entitlement to the credit on the ground of use cannot be created by the revenue when non-existence in statute books. He relies upon the following judgements for these propositions: i) Escorts Ltd., v. CCE, Delhi 2004 (171) ELT145 (SC) ii) Shree Ramkrishna Steel Industries Ltd., v. CCE, Madras 1996 (82) ELT 575 iii) Sai Sahmita Storages Ltd., 2011-TIOL-863-HC-AP-CX iv) SG Navaratna Highway - 2012-TIOL-1245 v) Laxmi Enterprises 2014 (9) TMI 35 12. Learned Counsel also submits that towers and shelters are used by them as a service provider for providing telecommunication service (output service) as also passive infrastructure service; this plea and factum of use of towers and shelters has not been contradicted as incorrect or rejected by the adjudicating authority. Learned Counsel would also submit that the adjudicating authority has wrongly equated use of inputs with being consumed or used for going into eligibility to avail Cenvat credit. It is also his submission that the adjudicating authority in the impugned order has wrongly read the explanation to Rule 2 (k) of the CCR while denying the benefit of Cenvat credit to the appellants on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaken and the issue was never raised. It is also his submission that one of the issues in these appeals is also regarding denial of Cenvat credit on the service tax paid on the medi-claim insurance of their employees. He would submit that the issue is now well settled and the appellant is eligible to avail Cenvat credit. 14. Shri V Sridharan, Senior Advocate appearing for M/s. VIL, ICL VEL would submit that the arguments taken before the lower authorities in these bunch of cases are not properly addressed. It is his submission that the towers/shelters are movable inasmuch as that the said towers when they are re-located after dismantling and the shelters can also be dismantled and relocated. While supporting the arguments put forth by the learned Counsel for TTL, he would submit that the appellant herein were also rendering the services of business auxiliary services and the business support services for which the said towers are used for extending the services to various other telecom service providers. It is his submission that the said services which are provided by the appellant to other telecom agencies are under the statute and are mandated to be done so; hence, the ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit availment as well as utilisation thereof; records were audited by the authorities and there was no suppression on the part of the appellants and the appellants were being highly contested before the various forums. It is his submission that penalty be set aside, as the issue is a question of interpretation. 15. Shri Naresh Thacker, Advocate appearing on behalf of RTL and RCL would adopt all the arguments put forth by the senior counsel and hands over a chart indicating of demands in the cases of RTL and RCL. He would read the show-cause notice dated 17/11/2005 to show what is the case of the Revenue. As regards the RTC, it is his submission that there cannot be an allegation of suppression as the show-cause notice on an identical issue had been issued in respect of financial year 2006-07 and 2007-2008 by the Indore Commissionerate as well as Kolkatta Commissionerate as the appellant had locally registered themselves as service provider and availed the Cenvat credit on the towers/shelters. It is his submission that in the instant case, show-cause notices were issued invoking the extended period for the financial year 2006-2007 to 2009 to 2010 for demand; there cannot be any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod 01/04/2004 to 30/09/2006. He would submit that draft audit observations after the audit was communicated to appellant by letter dated 23/02/2007 which was replied by the appellants on 20/03/2007, wherein the appellant gave a detailed explanation and followed up the same by a letter dated 11/06/2007 explaining therein how they are eligible to avail Cenvat credit on the goods i.e., towers and shelters. He would then draw our attention to the final audit report which has been issued to the appellants vide letter dated 19/10/2007 and submits that though the draft audit observations communicated to the appellants on 23/07/2007 indicated that the appellant had possibly availed ineligible Cenvat credit on the towers and shelters, but the final audit report dated 19/10/2007 did not contain the allegations on improper availment of Cenvat credit on towers and shelters. It is his submission that in the light of the factual position, extended period invoked for the demands of the Cenvat credit is incorrect as in October 2007 itself the audit parties have dropped the objections in respect of ineligible Cenvat credit availed on towers and shelters. 16. Learned Additional Commissioner (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fan does not become marketable and covered by a notification entitling the manufacturer for set off duty on the nameplates. This decision however is ex-facie not applicable in the present context. (h) The reliance of the appellant on the judgment of the Division Bench of this Court in the case of Deepak Fertilizers Petrochemicals Corpn. Ltd. v. C.C.E., Belapur, (2013 (288) E.L.T. 316 (Tri.-Mumbai)) would also be of no assistance to the appellant. The appellant relied on the following observations in paragraph (5) of the judgment. The Tribunal has placed an interpretation which runs contrary to the plain and literal meaning of the words used in Rule 2(1). Moreover, as we have noted earlier, where as Rule 3(1) allows a manufacturer of final products to take credit of excise duty and Service Tax among others paid on any input or capital goods received in the factory of manufacturer of the final product, insofar as any input service is concerned, the only stipulation is that it should be received by the manufacturer of the final product. This must be read with the broad and comprehensive meaning of the expression input service in Rule 2(1). the input services in the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnector to set up a cellular mobile telecommunication system. In this context the Division Bench in interpreting the provisions of MRTP Act and considering the nature of cabins and the towers in paragraph 26 has observed as under: 26. ...At the same time, the tower and the cabin would be within the meaning of the building as well as the development under the BPMC Act (including other Corporation Act) and the MRTP Act respectively. The expression development under the MRTP Act clearly includes erection of any structure as well as any material or structural change in the building or its precinct. The term precinct would refer to the area adjacent as well as adjoining the building. (g) In the case of Municipal Corporation of Greater Bombay and others v. Indian Oil Corporation Ltd., (1991 Supp (2) Supreme Court cases 18, the issue which fell for consideration before the Supreme Court was as to whether storage tanks for petroleum products are land within the meaning of Section 3. or buildings as defined under Section 3 (s) of the Bombay Municipal Corporation Act, 1988 and are exigible to property tax. It was held that the petroleum storage tanks are structures or things attached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Rule 9 of CCR mandates that availment of credit and correctness thereof is the responsibility of the assessee. He would submit that burden to prove as to the eligibility and correctness of the Cenvat credit availed lies on the assessee taking credit. While at least in the case of TTL the assessee had argued before the Hon'ble High Court that the goods were immovable property, if that be so, how they can claim limitation today. It is his submission that in the case of TTL as well as others special audit or audit which has been conducted cannot be held to be a relevant factor for non invocation of extended period. 18. We have considered the submissions made by both the sides at length and perused the records. 19. The issue involved in these cases is regarding the eligibility to avail Cenvat credit on the towers and pre-fabricated buildings/shelters; and as to whether the appellants are to be saddled with the demands of reversal of Cenvat credit by invoking extended period or otherwise and whether penalties are to be imposed on them or not? 20. The undisputed facts are that the appellants are providers of telecom/cellular services. They are discharging service tax li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to credit of duty paid on tower parts, green shelter on the ground that tower/green shelter is immovable property and hence, do not quality as capital goods or inputs as defined under the Cenvat Credit Rules, 2004? Whether in the facts and circumstances of the case, the Appellate Tribunal was correct and justified in holding that tower would not qualify as part or component or accessory of the capital goods, i.e. antenna? 22. Their Lordships after considering all the detailed submissions made by the counsel before them and considering various case laws, came to a conclusion that Cenvat credit cannot be availed by the appellant therein either under the category of capital goods or inputs on the towers or pre-fabricated buildings. The relevant paragraphs wherein the Lordship have recorded the ratio are as under: 30. In the decision of Simbhaoli Sugar Mills Ltd. v. Commissioner of Central Excise, Meerut, (2001 (135) ELT 1239 (Tri-Del), the appellant was a manufacturer of sugar and availed a MODVAT credit on the joints, channels, angles and MS Beams used in fabricating supporting structures for installation of equipments such as vacuum pan, crystallizers, sugar grader, elev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the factory for manufacture of final products but does not include any equipment or appliance used in the office and those used for providing service. Further in the CKD or SKD condition the tower and parts thereof would fall under the chapter heading 7308 of the Central Excise Tariff Act. Heading 7308 is not specified in clause (i) or clause (ii) of rule 2 (a)(A) of the Credit Rules so as to be capital goods. Further the Appellants contention that they were entitled for credit of the duty paid as the Base Transreceiver Station (BTS) is a single integrated system consisting of tower, GSM or Microwave Antennas, Prefabricated building, isolation transformers, electrical equipments, generator sets, feeder cables etc. and that these systems are to be treated as composite system classified under Chapter 85.25 of the Tariff Act and be treated as 'capital goods' and credit be allowed, also is not acceptable. It is clear that each of the component had independent functions and hence, they cannot be treated and classified as single unit. It is clear that all capital goods are not eligible for credit and only those relatable to the output services would be eligible for credit. The g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to manufacture of final product or any other purpose within the factory of production. Sub-clause (ii) has been referred to as relevant by the appellant as the same pertains to goods except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service. Tower and parts thereof are fastened and are fixed to the earth and after their erection become immovable and therefore cannot be goods. 34. We therefore find no infirmity or illegality in the findings as recorded by the tribunal in holding that the subject items are neither capital goods under Rule 2(a) nor inputs under Rule 2(k) of the Credit Rules and hence CENVAT credit of the duty paid thereon was not admissible to the appellants. The appeals are devoid of merit and accordingly stand rejected. No orders as to costs. 23. It can be seen from the above reproduced ratio that the issue is now squarely covered by the decision of the jurisdictional High Court, which is binding on us and is in favour of Revenue. 24. Learned Counsel for the appellants were trying to distinguish the ratio of the Hon'ble High Court's judgement in Bharti Airtel Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the principles of annexation to the land. The twin tests are the degree or mode of annexation, and the object of annexation. [Solid and Correct Engineering Works v. CCE - (2010) 5 SCC 122 : 2010 (252) E.L.T. 481 (S.C.)]. From a combined reading of the definition of immovable property, in Section 3 of the Transfer of Property Act and Section 3(26) of the General Clauses Act, it is evident that, in an immovable property, there is no mobility. The test of permanency is whether the chattel is movable to another place of use in the same position, or is 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. [T.T.G. Industries Ltd. v. CCE - (2004) 4 SCC 751 (DB) : 2004 (167) E.L.T. 501 (S.C.); Ad Age Outdoor Advertising Private Limited, Hyderabad v. The Government of Andhra Pradesh - Judgment of APHC DB in W.P. No. 23811 of 2009 dated 11-2-2011]. The 90 metre huge tower can only be erected at another place after it is completely dismantled at the existing site, and cannot be moved to ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgements of this Bench in the case of GTL Infrastructure Ltd., for the proposition. We gave an anxious consideration on the submissions made on this point. In our considered view, we find arguments put forth by the learned Counsel needs to be rejected at the out set itself, inasmuch as the first and foremost in all these three cases, the issue before the Hon'ble High Court and the Tribunal was that the appellants therein were providers of storage and warehousing services; immovable property service and business auxiliary service, for which they need to have infrastructure in its place. In the cases in hand, with which we are dealing with are the telecommunication companies providing cellular services, we find that basically all the appellants herein are providers of telecommunication/cellular services and the facility created by them in form of towers and pre-fabricated buildings are for their own use. Predominantly, the towers and pre-fabricated buildings/shelters were utilised by the appellants herein for rendering their own telecom/cellular services. In view of this ratio laid down in the case of Sai Sahmita Storages Ltd., SG Navratna and GTL infrastructure Ltd., (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or any willful mis-statement or suppression of facts, or contravention of any of the provisions of the Central Excise Act or of the rules made thereunder with intent to evade payment of duty by such person or agent, the period of limitation of one year in the main section is substituted by the words five years. In other words, where the said proviso is attracted the duty etc. can be claimed even after expiry of one year for an extended period of five years from the date of the demand. To invoke the proviso three requirements have to be satisfied, namely, (1) that any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded; (2) that such a short-levy or short-payment or erroneous refund is by reason of fraud, collusion or willful mis-statement or suppression of facts or contravention of any provisions of the Central Excise Act or the rules made thereunder; and (3) that the same has been done with intent to evade payment of duty by such person or agent. These requirements are cumulative and not alternative. To make out a case under the proviso, all the three essentials must exist. (emphasis supplied) It would therefore, be necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d cannot be invoked. In our considered view, in all these appeals all the appellants acted under bonafide belief that they are eligible for Cenvat credit of duty paid on towers and pre-fabricated buildings and filed returns indicating availment and utilisation of credit, allegation of suppression of material facts with intent to evade tax cannot be sustained. 32. We find considerable force in the arguments raised by the learned Counsel on limitation; accordingly, we hold that the impugned orders that confirms the demands invoking extended period of Cenvat Credit availed and utilised by all appellants herein, are unsustainable and are liable to set aside and we do so. 33. As regards the demands which are within the limitation period; on merits the issue is covered against the appellants, demands in respect of show-cause notices which are within the limitation period are liable to be upheld and the impugned order to the extent are sustainable. The demands within the limitation period as confirmed are upheld along with interest. 34. In our considered view, as the issue was of are interpretative nature i.e., as to eligibility of Cenvat credit or otherwise on the towers and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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