Cellular Mobile Service Provider not entitled to avail CENVAT credit on
Tower Parts & Pre-fabricated buildings
INSTRUCTION No. F. No. 267/60/2014-CX.8,
Dated-
11th November, 2014
Ministry of Finance
Department of Revenue
Central Board of
Excise and Customs
Subject: Judgement of Hon’ble Bombay High Court in
the case of M/s Bharti Airtel Ltd. vs The Commissioner of Central Excise,
Pune III in Central Excise Appeal No. 73 of 2012 and 119 of 2012 (reported
as 2014-TIOL-1452-HC-MUM-ST) – reg.
Attention
is invited to the judgement of Hon’ble Bombay High Court in the case of M/s
Bharti Airtel Ltd. vs The Commissioner of Central Excise, Pune III in
Central Excise Appeal No. 73 of 2012 and 119 of 2012 (reported as
2014-TIOL-1452-HC-MUM-ST), wherein regarding the issue whether Cellular Mobile
Service Provider is entitled to avail CENVAT credit on Tower Parts &
Pre-fabricated buildings, the Hon’ble Bombay High Court has held in favour of
revenue. While relying on the decision of the Hon’ble Supreme Court in the case
of Saraswati Sugar Mills vs CCE Delhi, (2011(270)ELT 465) = 2011-TIOL-73-SC-CX,
the Hon’ble Bombay High Court has, inter-alia, observed as under:
“It would be misconceived and absurd to accept that tower is a
part of antenna. An accessory or a part of any goods would necessarily mean
such accessory or part which would be utilized to make the goods a finished
product or such articles which would go into the composition of another
article. The towers are structures fastened to the earth on which the antennas
are installed and hence cannot be considered to be an accessory or part of the
antenna. The position in this regard stands fortified from the decision of the
Supreme Court in the case of “Saraswati Sugar Mills vs CCE Delhi, (2011
(270) ELT 465) = 2011-TIOL-73-SC-CX“. From the definition of
the term ‘input’ as defined in 2 (k) of the Credit rules it is clear that the
Appellant is a service provider and not a manufacturer of capital goods. A
close scrutiny of the definition of the term capital goods and input indicates
that only those goods as used by a manufacturer would qualify for credit of the
duty paid. As observed hereinabove a service provider like the appellant can
avail of the credit of the duty paid only if the goods fall within the ambit of
the definition of capital goods as defined under Rule 2(a)(A) of the Credit
Rules. The contention of the appellant that they are entitled for the credit of
the duty paid towers and PFB and printers is defeated by the very wording of
the definition of input. In any case towers and PFB are in the nature of
immovable goods and are non-marketable and non-excisable. If this be the
position then towers and parts thereof cannot be classified as inputs so as to
fall within the definition of Rule 2(k) of the credit rules. We clarify that we
are not deciding any wider question but restricting our conclusion to the facts
and circumstances which have fell for our consideration in these appeals.
We therefore find no infirmity or illegality in the findings as
recorded by the tribunal in holding that the subject items are neither capital
goods under Rule 2(a) nor inputs under Rule 2(k) of the Credit Rules and hence
CENVAT credit of the duty paid thereon was not admissible to the appellants.
The appeals are devoid of merit and accordingly stand rejected. No orders as to
costs.”
1.
The above decision of the Hon’ble Bombay High Court is brought
to notice of all concerned for compliance.
Yours faithfully,
(Vikas Kumar)
Director (CX-8)
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