We are sharing with you an important judgment of the Hon’ble High Court of Bombay in the case of Bharti Airtel Ltd. Vs. The Commissioner of Central Excise, Pune III [2014-TIOL-1452-HC-MUM-ST]on following issue:
Whether Cenvat credit is available to provider of Cellular Mobile Service on Tower Parts & Pre-fabricated buildings?
Facts & Background:
Bharti Airtel Ltd. (“the Appellant”) is engaged in providing Cellular telephone services (“the Output Service”) and accordingly paying Service tax as applicable. The Appellant availed Cenvat credit of Excise Duty on the Base Trans-receiver Station (“BTS”) claiming to be a single integrated system consisting of tower, GSM or Microwave Antennas, Prefabricated building, isolation transformers, electrical equipments, generator sets, feeder cables etc., classified under Chapter 85.25 of the Central Excise Tariff Act, 1985 (“CETA”). Accordingly, the Appellant contended that Cenvat credit on said ‘Capital goods’ was rightly available to them under clause (i) of Rule 2(a)(A) of the Cenvat Credit Rules, 2004 (“the Credit Rules”).
Rule 2(a)(A) of Credit Rules reads as under:
“(a) capital goods means:-
(A) the following goods, namely:-
(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act;
(ii) pollution control equipment;
The Commissioner allowed only Cenvat credit on antenna amounting to Rs. 2,38,54,970/- and disallowed the Appellant’s claim for Cenvat credit amounting to Rs. 13,02,08,928/- on other items viz. the tower and parts thereof and the prefabricated building on the following grounds:
Applying the same reasoning, credit on prefabricated building was also rejected.
Thereafter, the Appellant preferred an appeal before the Hon’ble Tribunal where also the said demand was confirmed. Being aggrieved, the Appellant preferred an appeal before the Hon’ble High Court of Bombay.
The Hon’ble High Court of Bombay after detailed deliberation denied the Cenvat credit to the Appellant and held as under:
Therefore, on the basis of the above judgment, the Hon’ble High Court of Bombay rejected the contention of the Appellant and decided the case in favour of the Revenue.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: email@example.com)