Mobile towers and prefabricated buildings qualify as capital goods and inputs under CENVAT Rules, allowing mobile service providers to claim CENVAT credit on excise duties paid.

JUDGMENT :

NONGMEIKAPAM KOTISWAR SINGH, J.

1. The core issue involved in this set of appeals is whether the mobile service providers (MSPs) who pay excise duties on various items for setting up their business more particularly for erection of mobile towers and peripherals like pre-fabricated buildings (PFBs) etc. can take the benefit of CENVAT Credit under the CENVAT Credit Rules, 2004 (hereinafter referred to as the “CENVAT Rules”) for the purpose of payment of service tax on the output services rendered by them. With respect to the same, conflicting views have been given by two High Courts, namely the High Court of Bombay and High Court of Delhi. The Bombay High Court has ruled against the MSPs, favouring the Revenue, holding that MSPs are not entitled to CENVAT credit on mobile towers and prefabricated buildings. Whereas, the Delhi High Court has held to the contrary extending the benefit of CENVAT credit to the MSPs. The decisions of both the High Courts have been challenged before this Court by the respective aggrieved parties, by way of the present set of appeals.

1.1 In the lead judgment of the Bombay High Court which has been challenged before this Court in Civil Appeal No. 10409-10 of 2014, namely Bharti Airtel Limited v. The Commissioner of Central Excise, Pune (Bharti Airtel, for short) rendered on 26.08.2014 in Central Excise Appeal Nos.73 of 2012 and No. 119 of 2012, the Bombay High Court held that mobile towers and other components do not fall within the definition of “capital goods” as defined under Rule 2(a)(A) of the CENVAT Rules, nor are these “inputs” within the meaning of Rule 2(k) and, hence, the MSP is not entitled to CENVAT credit on duty paid on these items.

1.2 The aforesaid decision of the Bombay High Court in Bharti Airtel (supra) has been reiterated in the following cases:

(i) Central Excise Appeal No.126 of 2015 and Central Excise Appeal No.127 of 2015 vide order dated 10.09.2015 which has been assailed before this Court in CA No.7119 of 2015 (Vodafone India Limited v. Commissioner of Central Excise) and CA No.7179 of 2015 (Vodafone India Limited v. Commissioner of Central Excise);

(ii) Central Excise Appeal No.191 of 2015 and Central Excise Appeal No.190 of 2015 vide order dated 12.10.2015 against which CA No.1077 of 2016 (Tata Teleservices Ltd. vs. Commissioner of Central Service Tax) and CA No.1078 of 2016 (Tata Teleservices Maharashtra Ltd. v. Commissioner of Central Service Tax) have been filed before this Court;

(iii) Central Excise Appeal No.159 of 2015, out of which CA No.5112 of 2021 (Idea Cellular Ltd. vs. Commissioner of Service Tax) has arisen;

(iv) Central Excise Appeal No.1 of 2016, Central Excise Appeal No.2 of 2016, Central Excise Appeal No.4 of 2016, Central Excise Appeal No.6 of 2016, Central Excise Appeal No.7 of 2016 which have been challenged in CA No.1201 of 2018 (Reliance Communications v. Commissioner of Service Tax), CA No.1205/2018 (Reliance Communications v. Commissioner of Service Tax), CA No.1203 of 2018 (Reliance Communications v. Commissioner of Service Tax), CA No.1204 of 2018 (Reliance Communications v. Commissioner of Service Tax) and the CA No.1202 of 2018 (Reliance Communications v. Commissioner of Service Tax);

(v) Central Excise Appeal No.7 of 2017 rendered on 02.04.2018 which has been challenged in CA No.5832 of 2018 (M/s Reliance Communication Infrastructure v. Commissioner of Service Tax, Mumbai).

1.3 The Delhi High Court in the case of Vodafone Mobile Services Limited v. CST, Delhi 2019 [(27) G.S.T.L. 481 (Del.)] (Vodafone, for short) decided on 31.10.2018 arising out of C.E.A.C. Nos.12-13 of 2016, 6 of 2017 and 4 of 2018, SERTA Nos.14-20 of 2016, on the contrary, held that towers and other associated structures like prefabricated buildings (PFBs) are covered by the definition of “capital goods” and are “inputs” as defined under CENVAT Rules and hence, MSPs are entitled to input credit on excise duty paid towards installation of mobile towers and PFBs. This judgemen