2026-VIL-1122-MAD-CE
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CENTRAL EXCISE High Court Cases

Central Excise - CENVAT Credit eligibility on mobile towers and pre-fabricated shelters forming part of Base Transmission Station - Appellants, telecom service providers, availed Cenvat Credit on excise duty paid on towers and pre-fabricated structures/shelters that are part of the Base Transmission Station (BTS) for providing telecommunication service - Credit was denied by the Tribunal on the footing that towers are immovable, non-marketable and non-excisable - Whether towers and pre-fabricated shelters are capital goods under Rule 2(a)(A) or inputs under Rule 2(k) of the CCR, 2004 - HELD - The issue stands covered by the Supreme Court judgment in the assessee's own case. Towers and pre-fabricated buildings are not rooted in the earth, are not imbedded in the earth as in the case of walls or buildings, and are not attached for the permanent beneficial enjoyment of that to which they are attached under Section 3 of the Transfer of Property Act. The tower is brought in CKD or SKD form, is assembled at site, can be dismantled and re-assembled without any change in its character, and can be sold in the market - Applying the tests of permanency, intendment, functionality and marketability, these items are movable and hence goods. Though neither tower nor shelter finds mention in the Chapters specified under sub-clause (i) of Rule 2(a)(A), they support the BTS/antenna for effective transmission of mobile signals and are accessories of the BTS/antenna falling under Chapter 85. They are therefore capital goods under sub-clause (iii) read with sub-clause (i) of Rule 2(a)(A), and since they are used for providing output service, the assessee is entitled to Cenvat Credit on the duty paid. Alternatively, these goods qualify as inputs under Rule 2(k) - The assessee appeals are allowed - CENVAT Credit - Input services used for erection and commissioning of towers and shelters - Revenue appealed against the Tribunal order allowing Cenvat Credit on cell site related services, shelter related services and pre-tower and tower related services - Denial was on the ground that the services relate to erection and commissioning of towers and pre-fabricated buildings that constitute immovable property - Whether services of erection and commissioning are eligible input services under Rule 2(l) of the CCR, 2004 - HELD - The towers and pre-fabricated buildings are not immovable property. Services rendered in connection with their erection and commissioning are therefore entitled to Cenvat Credit. The definition of input services under Rule 2(l) is wide and inclusive and enables credit in respect of services used in relation to setting up of a factory. The activities of erection and commissioning are encompassed within the scope of the definition - The Larger Bench of the Tribunal had observed that the decision holding towers to be immovable was limited to inputs as a source of credit, and that there is no break in the CENVAT chain insofar as input service is concerned. The same issue was held in favour of the assessee by the Tribunals in its own case - The Revenue appeals are dismissed and the assessee appeals on denial of credit on input services are allowed - CENVAT Credit - Rent-a-cab, outdoor catering, authorised service station and tour operator services - Tribunal allowed Cenvat Credit on these services - Revenue did not assail eligibility of the assessee to credit but contended that a percentage would have to be reduced on account of personal use or consumption, relying on a Notification dated 01.03.2011 - Whether credit on these services is to be reduced on account of personal use or consumption - HELD - The Notification makes it incumbent on the assessee to establish that services in relation to outdoor catering have not been used for personal use or consumption by an employee. The Notification does not include services of authorised service station, tour operator and rent-a-cab, so its invocation to these services is erroneous. The Notification is dated 01.03.2011 whereas the period in question is between 2004 and 2008, and it is inapplicable even in the case of outdoor catering. Considering the wide ambit of input services under Rule 2(l) of the 2004 Rules, and the fact that these very services were allowed in the case of other telecom operators, the question is answered in favour of the assessee - The Revenue appeals are dismissed and the assessee appeals are allowed - Exemption under Notification No. 4/2004 for telecom services provided to units in Special Economic Zone - Tribunal set aside the denial of exemption and the demand raised thereon - Revenue contended that the telecom services were not wholly consumed and utilised within the SEZ - Whether exemption under Notification No. 4/2004 can be denied where mobile services provided to SEZ units are also used outside the SEZ unit - HELD - The mobile services are provided by the assessee to SEZ units and the department has no case that the subscribers are outside the SEZ units. Merely because the facility of the mobile phone is used outside the SEZ unit also, the exemption cannot be denied. The period involved is after the SEZ Act, 2005 came into existence. Section 26 of the Act grants exemptions from taxes and duties to SEZ and Section 51 provides that the Act shall have overriding effect. The Court concurs with the Tribunal that the denial of exemption is unjustified - The question of law is answered against the Revenue and the Revenue appeals are dismissed.
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