Order Date – 21 February 2023

Parties: Ms. ATC Telecom Infrastructure Private Limited Vs Commissioner, Service Tax, Delhi-II

Facts –

• The Appellant, Ms. ATC Telecom Infrastructure Private Limited, availed CENVAT credit of excise duty paid in respect of capital goods and inputs used in setting up passive infrastructure to various telecom companies.
• Four show cause notices were issued to the appellant, seeking to deny CENVAT credit availed on the ground that the 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.

Issue –

• Whether the appellant rightly availed CENVAT credit on inputs and capital goods?

Order –

• The Tribunal held that in the decision of the Supreme Court in Sirpur Paper Mills Ltd. vs. Collector of Central Excise, Hyderabad wherein the Supreme Court observed that merely because a machine is attached to earth for more efficient working and operations it would not per se become immovable property. Thus, in view of the factual position and the decisions of various court, it was held that the towers and shelters would not be immovable property.
• The Delhi High Court in Vodafone Mobile Services examined “inputs‟ under rule 2(k) of the 2004 Rules and held that the term “all goods” mentioned in Rule 2(k) of the Credit Rules would cover all the goods used for providing output services.
• The Delhi High Court in Vodafone Mobile Services held that the towers and shelters plainly act as components/parts and in alternative as accessory to the BTS and would are covered by the definition of “capital goods”. Thus, it was held that the appellant was entitled to take CENVAT credit since the items in dispute are “capital goods‟.