In a relief to Bharti Airtel, the Banglore Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the CENVAT credit on tower materials and prefabricated buildings or shelters.
The appellant, M/s Bharti Airtel contended that tower materials and prefabricated buildings or shelters on which CENVAT credit has been availed by the appellant are ‘capital goods’ and, therefore, the availment of CENVAT credit is valid. The impugned order has denied CENVAT credit of duty paid on goods like angles, beams, channels, tower/tower materials and pre- fabricated shelters on the ground that the said items do not fall under rule 2(a) of the Credit Rules and also on the ground that they do not qualify as accessories or components.
The appellant contended that tower/tower materials and prefabricated shelters are integral to the erection of the cell sites for providing cellular coverage in public areas and would be ‘capital goods’ used in providing the output services for the appellant. According to the appellant, a cell site of a cellular operator consists of antennae, which receives and transmits signals so as to facilitate the telecommunication service of the appellant. These antennae are mounted on the tower and a typical tower would have more than four or five antennaes to receive and transmit the signals. The appellant contends that the towers help the antennae in avoiding obstacles; in avoiding earth’s curvature; in providing deep indoor coverage; and in covering large area. Thus, without the towers the antennae cannot be erected and positioned for the purpose of transmitting the microwave signals so as to get the maximum coverage and, therefore, the towers become part and parcel of the various equipment used for providing the output service of telecommunication service.
The coram headed by the President Justice Dilip Gupta and Technical Members P.V. Subba Rao followed the decision of the Delhi High Court in Vodafone Mobile Services and held that the appellant would, therefore, be entitled to claim CENVAT credit on tower materials and prefabricated buildings/shelters.
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