Learned Counsel relied on the Hon’ble Supreme Court’s decision in CCE, Ahmedabad vs. Solid & Correct Engineering Works reported in 2010 (252) E.L.T. 481 (S.C.). The Supreme Court was examining excise duty liability of asphalt drum hot mix plant. The Court examined Section 3 (26) of the General Classes Act with reference to “Immovable Property”. The term “attached to the earth” has been examined with reference to Section 3 of Transfer of Property Act. The Hon’ble Apex Court concluded that any plant which is fixed by nuts and bolts to a foundation, wherein there is no assimilation of the machinery with a structure permanently and the civil foundation was only necessary to provide a wobble free operation of the machine, the test of permanency would fail. We have carefully perused the Apex court order in this case. The Apex court held that the hot mix plant which is specifically covered under Plant and Machinery Tariff Heading 8474 are manufactured and brought. The point decided by the Apex court was whether setting up of such plant and machinery would amount to manufacture liable to Central Excise. First of all, in the present case we have no admitted capital goods brought for installation or erection in the desired site. The towers and their components cleared as angles and channels or as set of angles in CKD condition are cleared after duty payment by the manufacturer under Chapter 73, which is an excluded chapter for capital goods. As such, there is no movable capital goods which are otherwise eligible for Cenvat credit which are being denied such credit only applying the test of immovability.
Tower Parts (MS Channels, Angles etc.) as “Inputs” for availing credit :- An alternate claim has been made by the appellants to allow Cenvat credit paid on structural parts/towers/ shelters treating them as inputs in terms of Rule 2 (k) (ii) which allows credit of all goods used for providing output services. It was argued that there is no bar for goods which do not fall under the category of capital goods to qualify as inputs. Reliance was placed on the Larger Bench decision in Union Carbide India Ltd. vs. CCE, Calcutta – I reported in 1996 (86) E.L.T. 613 (Tribunal). In this ruling, Tribunal considered spare parts of machines to be eligible for credit as inputs under Modvat scheme. In Tata Engineering & Locomotive Co. Ltd. vs. CCE, Pune reported in 1994 (70) E.L.T. 70 (Tribunal), the Tribunal held that credit on the machines which stand excluded is available under input category. We have examined the appellant’s plea in the light of decided cases. In the present case, duty paid items are MS Angles and Channels/Shelters which are brought to the site installed/erected and further put to use for mounting/installing telecommunication antenna and other equipment. It is necessary to decide whether duty paid MS angles/shelter are used by infra companies for providing business support service to telecom companies or for providing telecom service by telecom operators. This will bring us to the next question relevant to decide this issue.
Question of nexus and Cenvat credit flow :- The duty payment is on MS angles, channels (or towers in CKD as claimed by the appellants) and pre-fabricated shelters. The credit of this duty is claimed. The admitted basic requirement for eligibility of any duty credit is that goods on which duty is paid (credit of which is claimed) should have a connection or nexus to the output service. The credit availed on input is used for discharging tax on output service. In the present case, the duty paid MS angles, channels etc. are brought to the site, fabricated into towers on a concrete platform. Similarly, the duty paid pre-fabricated shelters are brought and fixed to the ground base firmly. On such towers, the antenna or dish are fixed and connected by cables to electronic equipment housed in the pre-fabricated shelter on the ground. It is apparent that these duty paid items are not used for providing telecommunication service. The telecommunication service is provided by using erected and fixed towers and shelters. The inputs like MS Angles and Channels have gone into the making of such towers which in turn are used for providing infra-support service/telecom service. To apply the term “used for” in the definition for inputs, there should be a nexus between the inputs goods and the output service. In the present case the manipulation/fabrication of raw materials involved in erection and installation, fixing of towers and shelters will render such nexus tenuous. If the claim of the appellant is to be accepted, the credit can be even extended to duty paid MS Ingots if procured by the appellants to get the MS Angles manufactured which in turn used for erection of tower which in turn is used for providing telecom service. It is clear that such far remote linkages are not within the scope of the term “used for”.
Learned Counsel also relied on decision of Hon’ble Supreme Court in Hyundai Unitech Electrical Transmission Ltd. reported in 2015 – VIL – 104 – SC – CE. In the said case the Hon’ble Supreme Court held that doors and electrical boxes are components and/or parts of wind operated electricity generators. Learned Counsel submitted that towers of wind mill generator stand on a similar footing to the towers now in dispute and these should be considered as parts of overall BTS. We have examined the said decision as well as the Tribunal’s decision which was considered by the Supreme Court. It is clear that the Tribunal was considering the scope of terms “wind operated electricity generator, their components and parts thereof”. Applying the principle in a Customs case of import of such towers, the Tribunal held the assessee eligible for exemption on such towers as parts. The Tribunal in Customs case Bharat Heavy Electricals Ltd. vs. CC, Chennai reported in 1999 (108) E.L.T. 448 (Tribunal) examined the technical literature of imported wind mill generator/tower to arrive at the decision. Here, it is the assertion of appellants that the tower should be considered as part of BTS. The integrated BTS is never cleared as excisable item. The various tower structures are erected at site and integrated to create the required infra-structure. Hence, the decision of the Hon’ble Supreme Court that doors and electrical boxes are to be considered as parts of electricity generator is not of any help to appellants.
Applicability of ratio followed for telecom companies to infrastructure companies :- On the above analysis, the first point for difference of opinion referred to this Larger Bench relating to non-applicability of the decision of the Hon’ble Bombay High Court in Bharti Airtel to infrastructure companies to provide business support service to telecom operators can be examined. We find in the normal course the nature of output service should not have any bearing to decide credit eligibility on capital goods now under dispute. A distinction was sought to be made that the decision of Hon’ble Bombay High Court was applicable only to active telecom service providers and not to providers of passive infrastructural support to such telecom operators. Reliance was sought to be placed on the decision of the Tribunal in GTL Infrastructure Ltd. vs. CST, Mumbai reported in 2015 (37) S.T.R. 577 (Tri. – Mumbai) and Tribunal’s final order No. A/382-383/2015 dated 26/11/2014 in Reliance Infratel Ltd. vs. CST, Mumbai – II reported in 2015 (38) S.T.R. 984 (Tri. – Mumbai). We have perused the GTL Infrastructure Ltd. decision. In the said decision it was mentioned that towers/BTS Cabins were used for providing business auxiliary service and, hence, Cenvat credit cannot be denied. Further, reliance placed by the Original Authority on Explanation II and Rule 2 (k) (i) was found to be incorrect as the same dealt with a manufacturer and not a service provider. The Tribunal was referring to its earlier order in Bharti Airtel Ltd. vs. CCE, Pune reported in 2013 (29) S.T.R. 401 (Tri. – Mumbai) and observed that the said case dealt with facts which are totally different. It was found that since appellants were allowing the operators right to install antenna and BTS equipments and rendering an output service under business auxiliary service they were eligible for credit. We find that this decision of Tribunal is not based on a proper appreciation of the ratio of the Hon’ble Bombay High Court. The Hon’ble Bombay High Court order in Bharti Airtel Ltd. (supra) was not available to the Tribunal while deciding GTL Infrastructure Ltd. The tower and BTS Cabin are used for providing output service, here business auxiliary/support service but the question is, is there any duty claimed as credit paid on tower or BTS Cabins as installed at site. These items cannot be considered as inputs as they were held to be immovable property. The inputs which suffered duty like MS angles and pre-fabricated shelters, per se, were not used for providing output service. In other words there is a tower and cabin structure erected and embedded before such support service could be provided to the telecom operators.
It is necessary to note that before infrastructure companies came into the picture, telecom operators themselves were putting up such infrastructure and using the same to provide telecom service. In other words, in the absence of infrastructure companies as an intermediary, telecom companies themselves created such infrastructure and “provided” such business support service to self. The issue of service tax liability in such situation on business support service is not raised because there are no two persons as a provider or recipient of such service. In a sense such service was to the self. Considering such factual matrix, we find that no distinction could be made between the telecom operators and the infrastructure companies in deciding the eligibility of Cenvat credit on the impugned items now under consideration.
Further, it was contended by the appellants that even if towers shelters and other materials are held to be immovable property, credit cannot be denied on them. Reliance was placed on the decision of Hon’ble Andhra Pradesh High Court in CCE, Visakhapatnam – II vs. Sai Sahmita Storages (P) Ltd. reported in 2011 (270) E.L.T. 33 (A.P.), Hon’ble Gujarat High Court decision in Mundra Ports and Special Economic Zone Ltd. reported in 2015 – TIOL – 1288 HC AHD ST and Hon’ble Punjab & Haryana High Court decision in Belsonica Auto Components India P. Ltd. reported in 2015 VIL 300 (P&H – ST). In Sai Sahmita Storages (P) Ltd. (supra), the Hon’ble Andhra Pradesh High Court held that there is no dispute that the assessee used cement and TMT bar for providing storage facility without which storage and warehousing services could not have been provided. The question relating to creation of an immovable asset and the implication of Cenvat credit flow in such situation was not examined in detail in the said order. Similarly, the Hon’ble Gujarat High Court also arrived at similar conclusion. It is seen the Hon’ble Punjab & Haryana High Court in Belsonica Auto Components India P. Ltd. (supra) was dealing with credit availability on input service paid on construction of civil structure. In the present case, we are dealing with credit eligibility of goods, either as inputs or as capital goods. Further, with due respect to these decisions, it is to be noted that the very same matters covered in the present appeals are discussed elaborately on a similar set of facts by the Hon’ble Bombay High Court in Bharti Airtel Ltd. (supra). When there is a detailed examination and ruling on identical set of facts by the Hon’ble High Court, the same are to be followed. Further, the Hon’ble Bombay High Court reiterated their findings arrived in Bharti Airtel Ltd. (supra) in the case of Vodafone India Ltd. in their order dated 01/09/2015 in civil appeal No. 126/2015 and others. The Hon’ble Bombay High Court examined various contentions now raised in these appeals and reiterated their findings recorded earlier in Bharti Airtel Ltd. (supra).
In such a situation and in the absence of any material before us to distinguish the said ratio vis-à-vis the fact of the present case we find the ratio of the Hon’ble Bombay High Court as laid down in Bharti Airtel Ltd. (supra) and Vodafone India Ltd. (supra) should be followed. Hence, first point of difference is answered against the appellant and in favour of Revenue.
The second point of difference of opinion referred to the Larger Bench is regarding the eligibility of the appellant to the credit on shelters and parts as capital goods. We find that our preceding analysis regarding ineligibility of credit on towers and shelters is equally applicable to the said items. The only reason for claiming the credit on shelters and parts is their classification under Chapter 85. We find that a particular classification of duty paid item by itself does not make the item eligible for Cenvat credit. The eligibility of credit is determined by the provisions of Cenvat Credit Rules. By classifying a product and paying duty under a particular heading, an automatic claim for such credit for that item cannot be made. The eligibility of any item for credit is to be decided as per provisions of Cenvat Credit Rules, 2004. As discussed elaborately hereinabove shelters were found to be not eligible for Cenvat credit either as capital goods or as inputs and as such some supplier classifying the product under Chapter 85 by itself does not make them eligible for credit if they are otherwise not entitled for the same. Learned Counsel contended that the denial of credit as held by Hon’ble Bombay High Court is only on classification of these shelters. We find that the Hon’ble High Court categorically held that towers and PFB are in the nature of immovable goods and are non-marketable and non-excisable. Further, we find that the analogy drawn by learned Counsel with plant and machinery to the present issue is not correct. The plant and machinery classifiable under specific tariff heading are manufactured and cleared on payment of duty as such machinery. Here, the facts are clearly different. Accordingly, the second point of reference is also answered against the appellant and in favour of Revenue.