Whether credit available on angles, channels used in the construction of towers for transmission of signals by mobile company ?

PJ/Case Law/2014-15/2176

Case:-M/s AIRCEL CELLULAR LTD Vs COMMISSIONER OF SERVICE TAX, CHENNAI

Citation:-2014-TIOL-570-CESTAT-MAD

Brief facts:-The applicants are engaged in the business of providing “Mobile Telephone Services”. They set up communication towers and base stations for transmission of signals. The issue involved in the appeals filed is whether Cenvat credit for angles, channels etc., used in the construction, erection, and installation of towers, for shelters and for pre-fabricated structures can be taken considering these goods as ‘capital goods' within the meaning of Rule 2(a) or as inputs within the meaning of Rule 2(k) of Cenvat Credit Rules, 2004. The period of dispute in the case of Air Cell Cellular Limited is Mar.' 09 to Dec.' 10 and the credit amount denied by impugned order, adjudicating two SCNs, is Rs. 2,15,62,637/-. In the case of M/s. Dishnet Wireless Ltd., the period involved in the impugned order, adjudicating two SCNs, is Mar.' 09 to Dec.' 10 and the amount involved is Rs.34,26,95,835/-. Further, there are fines and penalties involved. Presently, stay petition for waiver of pre-deposit of dues for admission of appeal is being heard.

Appellant’s contentions:-This issue has been a contentious issue and very many appellants have been before the Tribunal and obtained waiver of pre-deposit of dues for admission of appeals on identical issue. In one appeal finally disposed of by the Tribunal in Bharati Airtel Ltd., and Others Vs CST reported in 2013 (29) S.T.R. 401 (Tri.-Mum.) = 2012-TIOL-209-CESTAT-MUM, the Tribunal disallowed the credit. Against this, the appellants went in appeal to Bombay High Court and Bombay High Court stayed the order vide order dated 28-03-2012 in Central Excise Appeal (L) No. 35 of 2012 and no deposit could be collected so far. Subsequent to the said order of the Tribunal, the Bombay Bench of the Tribunal in the case of M/s. Essar Telecom Infrastructure Pvt. Ltd. Vs Commissioner of Service Tax, Mumbai – I vide Order No. S/790/2013/CSTB/C-1 dated 15.05.2013 directed pre-deposit of part of the amount confirmed against that party. This order was also stayed by the Bombay High Court vide order dated 02.07.2013 in Appeal No. C/88/2013 along with orders in Central Excise Appeal No. 73/2012 and 119 of 2012 filed by M/s. Bharati Airtel Ltd., before Bombay High Court. Thus, the position is that no part of credit taken by any assessee similarly placed and who has come before the Tribunal or Courts has been recovered so far.

Respondent’s contentions:-The learned Authorized Representative places reliance in the case of Maruti Suzuki Ltd reported in 2009 (240) E.L.T.641 (S.C.) = 2009-TIOL-94-SC-CX, Saraswati Sugar Mills Vs 2011 (270) E.L.T. 465 (S.C.) = 2011-TIOL-73-SC-CX and Vandana Global reported in 2010 (253) E.L.T. 440 (Tri.-LB) = 2010-TIOL-624-CESTAT-DEL-LBand argues that pre-deposit should be ordered. Thedecisions referred to by the learned Authorised Representative for Revenue is in respect ofmanufacture of excisable goods and not relating to output services. The degree of nexus thatcan be established varies in respect of inputs or capital goods vis-à-vis tangible excisableproduct as compared such goods vis-à-vis., intangible output service. Further, the decision ofthe Hon Apex Court in the case of Maruti Suzuki Ltd. (Supra) has been doubted by anotherBench of the Hon. Apex Court and the matter stands referred to a larger bench of the ApexCourt in the case of Ramala Sahkari Chini Mills Ltd. Vs CCE, Meerut – 2010 (260) ELT 321 (SC) = 2010-TIOL-102-SC-CX.

Reasoning of judgment:- The Hon’ble judgesnoted that as on date no other company providing similar services has been made to pre deposit any money on this issue for hearing their appeal. Therefore, they considered it proper to maintain parity among the various parties involved on the same issue. Hence, they order waiver of the requirement of pre-deposit of dues arising from the impugned orders for admission of the appeals and stay collection of such dues during the pendency of the appeals.

Decision:- The stay order granted.

Comment:- The analogy of the case is that in the light of various other decisions on the same issue and where no other parties were ordered to deposit any money, in this case also, following the same, the stay application was allowed on the issue of admissibility of cenvat on angles and channels without insisting any pre-deposit.

Prepared by : Monika Tak

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PJ/Case Law/2014-15/2176

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