The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed an order that denied cenvat credit on input and input services, capital goods on tower, tower material and shelter.
The appellant, Tower Vision India Private Limited, 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.
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.
The Counsel for the appellant submitted that the items in question, namely, tower, tower material and telecom shelters are movable goods received in complete knock down (CKD) condition by the appellant and its eligibility to avail Cenvat credit is determined at the time of such receipt of these items. It is for the reason of movability of these items only that Excise Duty is paid thereon by the suppliers, whose credit is availed by the appellant.
On the other hand, the Departmental Representative supported the impugned order and submitted that treating the prefabricated building (telecom shelter) and tower/tower materials/tower structure as movable goods and allowing Cenvat credit of the duty paid on these items 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.
A Two-Member Bench comprising SS Garg, Judicial Member and P Anjani Kumar, Technical Member observed that “By following the ratio of the decision in appellant’s own case decided by the Hon’ble High Court of Delhi cited (supra) and the various decisions of the coordinated bench of the Tribunal cited (supra), we are of the considered opinion that the impugned order denying the cenvat credit on input and input services, capital goods on tower, tower material and shelter etc. are not sustainable in law.”
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