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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 ..... pp. No.11/ 2019 is preferred by Revenue. 2. This Court, Vide order dated 20.05.2019, while admitting C. Ex. App. No.7/2019 has framed the following questions of law: "(1) Whether the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) was right in concluding that the towers, shelters and accessories used by the appellant for providing business support services are immovable property? (2) Whether the appellant is entitled to claim Cenvat Credit on the towers, shelter either as capital goods or inputs in terms of Rule 2 (a) or 2 (k) of the Cenvat Credit Rules, 2004? (3) Whether the CESTAT erred in applying the nexus test with reference to MS angles and Channels, whereas according to the appellant what was brought to the site were towers, shelters and accessories in CKD/SKD condition for providing services? (4) Whether the appellant was justified in terms of Rule 4 (1) of the Cenvat Credit Rules, 2004, in claiming Cenvat Credit of excise duty paid by the manufacturer of towers and shelters after receipt of such towers and shelters at their premises (i.e. tower sites)? (5) Whether emergence of immovable structure at intermediate stage (assuming without admitting) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with appropriate interest in terms of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 73 and 75 of the Finance Act, 1994, as amended, and also imposed penalty of an amount of Rs. 14,93,15,569/- in terms of Rule 15 of the CENVAT Credit Rules 2004 read with Section 78 of the Finance Act, 1994, as amended. 8. Being aggrieved with the said order, the assessee, M/s Bharti Airtel preferred an Appeal [Appeal No. ST/166/2009] before CESTAT, Kolkata, and the CESTAT, vide order dated 30.10.2018 has partly allowed the appeal filed by the appellant M/s Bharti Airtel Ltd. by setting aside the demand made beyond the normal period of limitation and the penalties imposed. However, the Tribunal has confirmed the demand, with interest, within the normal period of limitation. 9. As observed earlier, being aggrieved with the order dated 30.10.2018 passed by the CESTAT, separate appeals have been preferred by both the appellants, Bharti Airtel as well as the Revenue, wherein the above referred substantial questions of law have been framed by this Court. C.Ex. App. No. 11/2019 is preferred by the Revenue on the ground that the CESTAT has erred in holding that the extended period of lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely fastened to the tower, antenna cannot be kept firm and steady for proper receipt and transmission of radio signals. Thus, there cannot be any doubt that a mobile tower can be treated to be an accessory of antenna and BTS. Accordingly, since in terms of sub-clause (iii) of Rule 2 (a)(A), all components, spares and accessories of such capital goods falling under sub-clause (i) would also be treated as capital goods, a mobile tower can also be treated as "capital good". 11.11.12 We, therefore, agree with the conclusion arrived at by the Delhi High Court that towers and shelters (PFBs) support the BTS/antenna for effective transmission of mobile signals and thus enhance their efficiency and since these articles are components/accessories of BTS/antenna which are admittedly "capital goods" falling under Chapter 85 within sub-clause (i) of Rule 2 (a) (A) of CENVAT Rules, these items consequently are covered by the definition of "capital goods" within the meaning of sub-clause (iii) read with sub-clause (i) of Rule 2 (a)(A) of CENVAT Rules. Further, since these are used for providing output service, i.e., mobile telecommunication service, and since these are "capital goods" receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these goods will go beyond the ordinary meaning of "use". Their usage in providing the output service is not remote but proximate. In fact, without the use of tower and PFB, it is inconceivable that the service provider can provide mobile services effectively. Rather, towers and PFBs are indispensable being accessories of antenna for providing mobile services. In this regard one may refer to the decision in Member, Board of Revenue, West Bengal Vs. M/s. Phelps & Co. (P) Ltd., (1972) 4 SCC 121 wherein it was held that, "6. We have now to find out what exactly is the meaning of the expression "for use by him in the manufacture of goods for sale". Identical words are used in Section 8(b) of the Central Sales Tax Act 1956. This court was called upon to find out the scope of that expression in M/s. J.K. Cotton Spinning & Weaving Mills Co Ltd. Vs. Sales Tax Officer, Kanpur and Anr. (AIR 1965 SC 1310). Dealing with that expression this Court observed: The expression "in the manufacture of goods" would normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have been explained in an expansive manner as in the case of manufacture of final product under Rule 2 (k)(i), the definition of "input" with reference to providing output service under Rule 2 (k) (ii) need not be given a restrictive meaning as sought to be done by the CESTAT by holding that tower is not used directly for transmission of signal. In our view since the subject matter is same, i.e., what amounts to "input" though the end use is for two different products, one tangible, in the form of final manufactured product, and one intangible i.e., output service, applying similar tests to determine what amounts to "input" would not be impermissible. 11.12.4 We have also noted that the Bombay High Court had taken the view that it cannot be said that it is impossible to provide the service without the aid of the towers, thus showing non dependency of antenna on tower. In our view, while theoretically antenna may receive and transmit signal without the tower, practically, the same is not feasible and tower is an essential accessory for keeping the antenna at an appropriate height and in a stable position so that there is no disturbance in receiving and transmission of signal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g any output service. Even though tower and the PFBs are not electrical items/equipment in the sense that these do not transmit signals, yet these are indispensable for the effective functioning of antenna by which the radio signals are received and transmitted and accordingly, used for providing the mobile telephonic services to the subscribers. Thus, towers and PFBs, though are not electrical equipment for transmission of signals, yet these are used for transmission of signal by the antennas. Therefore, there can be no denying of the fact that there is a close proximity and nexus between their functioning and the ultimate transmission of radio signals which is the output service rendered by the MSPs. Hence, the view of the CESTAT which has not been disturbed by the Bombay High Court does not commend our acceptance. 11.12.6 Having held that the tower and pre-fabricated buildings (PFBs) are "goods" and not immovable property and since these goods are used for providing mobile telecommunication services, the inescapable conclusion is that they would also qualify as "inputs" under Rule 2 (k) for the purpose of credit benefits under the CENVAT Rules." 13. In view of above pronoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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