IMPORTANT POINT
Towers and shelters used in telecommunication qualify as 'inputs' under CENVAT Rules, allowing for credit claims despite being classified as immovable property.

JUDGMENT :

Vijay Bishnoi, C.J.

These two Central Excise Appeals are preferred on behalf of the appellants being aggrieved with the final order No.FO/A/77224-77226/2018, dated 30.10.2018 passed by the Customs, Excise and Service Tax Appellate Tribunal, Kolkata (hereinafter to be referred as “CESTAT”) in App. Nos.ST/166-167/2009 and ST/42/2011.

C.Ex.App. No.7/2019 is preferred by the appellant, Bharti Airtel Ltd. whereas C. Ex. App. No.11/ 2019 is preferred by Revenue.

2. This Court, Vide order dated 20.05.2019, while admitting C. Ex. App.No.7/2019 has framed the following questions of law:

“(1) Whether the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) was right in concluding that the towers, shelters and accessories used by the appellant for providing business support services are immovable property?

(2) Whether the appellant is entitled to claim Cenvat Credit on the towers, shelter either as capital goods or inputs in terms of Rule 2(a) or 2(k) of the Cenvat Credit Rules, 2004?

(3) Whether the CESTAT erred in applying the nexus test with reference to MS angles and Channels, whereas according to the appellant what was brought to the site were towers, shelters and accessories in CKD/SKD condition for providing services?

(4) Whether the appellant was justified in terms of Rule 4(1) of the Cenvat Credit Rules, 2004, in claiming Cenvat Credit of excise duty paid by the manufacturer of towers and shelters after receipt of such towers and shelters at their premises (i.e. tower sites)?

(5) Whether emergence of immovable structure at intermediate stage (assuming without admitting) is a criterion for denial of Cenvat Credit?”

3. Similarly, vide order dated 09.09.2019 passed in C. Ex. App. No.11/2019, this Court has framed the following questions of law:

“1. Whether the finding of the learned CESTAT that there was no suppression of material facts is perverse to the materials on record ?

2. Whether in view of the stand taken by the appellant that there was suppression of material facts, the learned CESTAT was justified in holding that demand beyond the normal period of limitation shall not be sustainable in law ?”

4. The brief facts of the cases are that appellant M/s Bharti Airtel Ltd., which is engaged in providing telecommunication services and holding service tax registration, received a show cause notice dated 28.08.2008, wherein it was alleged that the appellant had wrongfully taken credit on tower parts and shelters in contravention of the CENVAT Rules since these are not recognized either as capital goods or inputs and accordingly, it was proposed to disallow the CENVAT credit of Rs.14,93,15,569 under Rule 14 of the CENVAT Rules, read with Section 73 of the Finance Act, 1994. The said notice proposed to charge interest under Section 75 of the Finance Act, 1994 and imposition of penalty under Rule 15 of the CENVAT Rules read with Section 78 of the Act.

5. The contention of Excise Department was that the activity of erection/fabrication of towers does not amount to manufacture. Tower materials received by the assessee and used for erection/fabrication of tower cannot be considered as inputs. Similarly, the shelters and shelter accessories do not have any nexus with telecom service since these are used for housing/storage of generator sets and other equipments. Thus CENVAT credit availed and utilized on these goods by the assessee in contravention of Rule 3 of the CENVAT Credit Rules, 2004, read with Rule 6 of the Service Tax Rules 1994 amounted to evading payment of service tax to the tune of Rs.14,93,15,569/-.

6. The appellant M/s. Bharti Airtel Ltd., replied to the said notice denying and disputing the allegations made therein.

7. Thereafter, the case was adjudicated upon by the Commissioner, Central Excise, Guwahati vide Order-in-Original No.04/COMMR/ST/2009, dated 31.03.2009 and disallowed