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TMI Blog2023 (9) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case are that the appellant is engaged in providing telecom network infrastructure support services to various telecommunication companies providing mobile services. In this regard, the Appellant has been issued IP1 licence by Department of Telecommunication, Ministry of Communication and Information Technology. The telecommunication infrastructure support services so provided by the Appellant at telecom sites is on non exclusive basis. * During the course of Audit of the appellant's records, some discrepancies were noticed by the audit party. The major objections of the audit team were: (i) Wrong availment of CENVAT Credit on Pre-fabricated Building (telecom shelter) and Towers/Tower materials/Tower structures falling under CETH 94060091 & 730820190 by declaring these items as capital goods and (ii) Wrong availment of Cenvat credit of services utilized in relation to Pre-fabricated shelters and Towers as input service providing output service. * On these allegations, two show cause notices were issued to the appellant. * The appellant filed detailed reply to the show cause notices and after following due process, the Ld. Commissioner has confirmed the deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems on the output service namely, the cellular service, is not correct because in the CKD or SKD condition the tower and parts thereof would fall under Chapter Heading 7308 of the Central Excise Tariff Act, 1985, which is not specified in clause (i) or clause (ii) of Rule 2(a)(A) of the Cenvat Rules so as to be capital goods. In support of his submission, he relied upon the decision of the Bombay High Court in Bharti Airtel Ltd vs. Commissioner Central Excise, Pune-III [2014 (35) S.T.R. 865 (Bom.)]. 8. Ld. DR also submitted that the decision of the Hon'ble Delhi High Court in the appellant's own case has been challenged before the Hon'ble Supreme Court and the notice has already been issued, therefore, he has prayed that this case may be kept in abeyance till the decision of the Hon'ble Apex Court in the case of Vodafone Mobile Services Ltd vs. Commissioner of Service Tax, Delhi [2018-TIOL- 2409-HC-DEL-ST 2019 (27) G.S.T.L481 (Del)]. 9. After considering the submissions of both the parties and perusal of the records and the various decisions relied upon by both the parties, we find that this issue of Cenvat Credit on input/input services on the impugned items and capital goods h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties. The tribunal failed to appreciate the "permanency test" as laid down by the Supreme Court in Solid and Correct Engineering (supra)." (Emphasis supplied) 13. It is seen that the decision of the Bombay High Court in Bharti Airtel was considered by the Delhi High Court. 14. Question No. 2 framed by the Delhi High Court is whether the assessees are entitled to claim Cenvat credit on the towers and shelters either as capital goods or inputs in terms of Rule 2(a) and (k) of the Cenvat Rules and whether towers and shelters would qualify as "accessories"? 15. The finding recorded by the Delhi High Court on this issue is as follows : "53. On examination of the definition and the decisions, the court is of the considered opinion that the term "all goods" mentioned in Rule 2(k) of the Credit Rules would cover all the goods used for providing Output Services, except those which are specifically excluded in the said Rule. Therefore, the definition is wide enough to bring all goods which are used for providing any output service. Further, from the decisions of the Supreme Court and other judgments referred to previously, the test applicable for determining whether inputs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , clearly goods in question have gone into the making of such towers which in turns are used for providing infra-support service/telecom service. It is therefore, held that the CESTAT erred in applying the nexus test and therefore, credit has to be extended to the duty paid MS angles and channels." (Emphasis supplied) 18. Question No. 4 framed by the Delhi High Court is whether the appellant was justified, in terms of Rule 4(1) of the Cenvat Rules, in claiming Cenvat credit of excise duty paid by the manufacturer of towers and shelters after receipt of such towers and shelters at the premises? 19. The finding on this issue is contained in paragraph 68 of the judgment and it is as follows : "68. On the basis of the above reasoning, the Tribunal had denied CENVAT credit to the assessee on the premise that the towers erected result into an immovable property, which is erroneous and contrary to the judgment of the Supreme Court in the case of Solid and Correct Engineering (supra). The towers which are received in CKD condition, are assembled/erected at the site subsequently giving rise to a structure that remains immovable till its use because of safety, stability and commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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