ATC Telecom Infrastructure Private Limited Vs Commissioner (CESTAT Delhi)
CESTAT Delhi held that towers, shelter and parts thereof are ‘capital goods’ accordingly entitled to avail Cenvat Credit under ‘Capital Goods’.
Facts- The appellant is engaged in setting up of passive infrastructure and provision of such passive infrastructure to various telecom companies. For this purpose, the appellant entered into ‘Passive Infrastructure Sharing Agreement’ with various telecom operators for setting up towers, shelter, diesel generator sets, air conditioner and electrical works, DC power plant, Battery Bank etc. and leasing of the same to these telecom operators. The appellant also provided operation and maintenance services with respect to infrastructure assets to the telecom operators. The appellant availed CENVAT credit of excise duty paid in respect of capital goods and inputs used in setting up such passive infrastructure.
During investigation, it was observed that the appellant had availed ineligible CENVAT credit. Accordingly, show cause notices were issued to the appellant, seeking to deny CENVAT credit availed and utilised by the appellant in respect of inputs and capital goods used in providing output services.
The demand of CENVAT credit availed by the appellant on towers, shelter and parts thereof, was confirmed on the ground that the subject goods were used for fabrication/erection of towers and shelters, which being attached to earth, were immovable in nature and thus, not used for providing output services in terms of the Circular dated 26.02.2008.
The issue involved in this appeal is about denial of CENVAT credit availed and utilized on inputs and capital goods used for setting up of passive infrastructure for provision of ‘Business Support Services’.
Conclusion- Another alternative submission advanced by the learned Counsel for the appellant that the items in dispute are ‘capital goods’ and, therefore, credit was correctly taken as ‘capital goods’ also deserves to be accepted.
Thus also, the appellant was also entitled to take CENVAT credit since the items in dispute are ‘capital goods’.
FULL TEXT OF THE CESTAT DELHI ORDER
This appeal has been filed by M/s. ATC Telecom Infrastructure Private Limited1 (earlier known as M/s. ATC Telecom Tower Corporation Pvt. Ltd.) for setting aside the order dated 28.09.2016 passed by the Commissioner adjudicating the four show cause notices. The Commissioner denied CENVAT credit availed on inputs and capital goods and utilised by the appellant for payment of service tax. The Commissioner also ordered for recovery of interest and imposed penalty.
2. The appellant is engaged in setting up of passive infrastructure and provision of such passive infrastructure to various telecom companies. For this purpose, the appellant entered into „Passive Infrastructure Sharing Agreement’ with various telecom operators for setting up towers, shelter, diesel generator sets, air conditioner and electrical works, DC power plant, Battery Bank etc. and leasing of the same to these telecom operators. The appellant also provided operation and maintenance services with respect to infrastructure assets to the telecom operators. The appellant availed CENVAT credit of excise duty paid in respect of capital goods and inputs used in setting up such passive infrastructure.
3. During investigation, it was observed that the appellant had availed ineligible CENVAT credit. Accordingly, the following four show cause notices were issued to the appellant, seeking to deny CENVAT credit availed and utilised by the appellant in respect of inputs and capital goods used in providing output services.
