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TMI Blog2024 (8) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... r (Appeals)], by which the order dated 18.01.2017 passed by the Joint Commissioner adjudicating two show cause notices dated 02.03.2010 and 06.10.2010 has been upheld and the appeal has been dismissed. 2. The Assistant Commissioner had disallowed CENVAT credit and ordered for its recovery from the appellant with interest in terms of rule 14 of the CENVAT Credit Rules, 2004 [the CENVAT Rules] read with section 73 (2) and section 75 of the Finance Act, 1994 [the Finance Act]. The Assistant Commissioner also imposed penalty under rule 15 (4) of the CENVAT Rules read with section 78 of the Finance Act. 3. The appellant is engaged in providing telecommunication services. It availed CENVAT credit on receipt of various tower materials and pre-fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 6. The submission of the appellant was not accepted by the Assistant Commissioner and the Commissioner (Appeals) and the entire CENVAT credit has been disallowed under rule 14 of the CENVAT Rules. 7. This appeal has been filed to assail the aforesaid order dated 11.07.2018 passed by the Commissioner (Appeals). 8. Shri Om P. Agarwal, learned Chartered Accountant appearing for the appellant submitted that the issue involved in this appeal as to whether CENVAT credit would be admissible to the appellant on tower materials has been settled by a Division Bench of the Tribunal in Vodafone Mobile Services Ltd. vs. CCE, Jodhpur [2023 (70) G.S.T.L. 476 (Tri- Del)]. 9. Shri Anand Narayan, learned authorized representative appearing for the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, 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 are used in the manufacture of goods is the 'functional utility' test. If an item is required for providing out the output services of the service provider on a commercial scale, it satisfies the functional utility test. In the facts of the present case, what emerges is that, BTS is an integrated system and each of its components have to work in tandem with each other in order to provide the required connectivity for cellular phone users and for efficient telecommunication services. The towers and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue and the observations are as follows: "44. From the above definition, clearly for goods to be termed "capital goods", in the present set of facts, should fulfil the following conditions: 1. They must fall, inter alia, under Chapter 85 of the first schedule to the CET or must be component, parts or spares of such goods falling under Chapter 85 of the first schedule to the Central Excise Tariff Act (CET); and 2. Must be used for providing output service. 45. Accordingly, all components, spares and accessories of such capital goods falling under Chapter 85, would also be treated as capital goods. Now, given that Cenvat credit is available to accessories, it is important to address whether towers and shelters would qualify as "accesso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astructure as the antennae cannot be placed at that altitude to generate uninterrupted frequency. Further, these shelters are accessories for the placement of various BTS equipment and other items for it to remain in a dust-free, ambient temperature. 47. From the foregoing discussion, clearly towers and shelters support the BTS in effective transmission of the mobile signals and therefore, enhance their efficiency. The towers and shelters plainly act as components/parts and in alternative as accessory to the BTS and would are covered by the definition of "capital goods". 48. In the present cases, the Tribunal, in this Court's view erred in interpreting the definition of "capital goods". It merely adopted the ratio laid down by the Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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