The Larger Bench of New Delhi CESTAT, held that the passive infrastructure companies hiring out telecom towers, to telecom companies, taxable under ‘Business Auxiliary/Support Services’, are not eligible to claim CENVAT Credit of MS Steel Angles/parts, pre-fabricated shelters parts, etc. used in erection of such towers.
In the said case, the assessees were providing ‘business Auxiliary Services’, or ‘Business Support Services’ for providing passive infrastructure i.e., hiring of towers, etc. and they took CENVAT Credit of MS Steel Angles/towers, pre-fabricated shelters parts. The Revenue deny the credit by relying on the case of Bharti Airtel Ltd. v. CCE (C.E.A. No. 73 of 2012, dated 26-8-2014). Honorable CESTAT held that:
MS Angles, Channels falls under chapter 73 thus, fails to fall under the definition of capital goods. Similarly, pre-fabricated shelters falling under Chapter 94 also fall outside the purview of the definition of capital goods.
To the alternate argument of the assessee, (that towers and pre-fabricated shelters ought to be considered as ‘Accessories’ of overall Base Transmission System (BTS) classifiable under Tariff Heading 8517), the CESTAT held that the Bombay High Court in Bharti Airtel Ltd. case observed that all the three terms – ‘components’, ‘spares’ and ‘accessories’ – used in rule 2(a)(A)(iii), should be understood as standing for movables only. Further, ‘Capital goods’ as defined under the CENVAT Credit Rules must be excisable goods. Tower being admittedly an immovable structure cannot be an accessory of any kind of instrument.
Towers are immovable structures and ipso facto non-marketable and non-excisable, thus also fails to classify under inputs.
The admitted basic requirement for eligibility of any duty credit is that goods on which duty is paid (credit of which is claimed) should have a connection or nexus to the output service. In other words, the credit availed on input is used for discharging tax on output service.
In any case, to be eligible as inputs or capital goods, such items must be ‘goods’ i.e., movable; but, in this case, towers have been held to be ‘immovable’ in State of A.P. v. Bharat Sanchar Nigam Ltd. (2011) 33 STT 553 (A.P.), Bharti Airtel Ltd. v. CCE (C.E.A. No. 73 of 2012, dated 26-8-2014), and Vodafone India Ltd. v. CCE (2015) which are binding precedents and therefore, said items are ineligible for credit.
CESTAT, NEW DELHI BENCH (LARGER BENCH)
Tower Vision India (P.) Ltd.
Commissioner of Central Excise (Adj.), Delhi
JUSTICE G. RAGHURAM, PRESIDENT
S.K. MOHANTY, JUDICIAL MEMBER
AND B. RAVICHANDRAN, TECHNICAL MEMBER
I. ORDER NO. 41 OF 2016
SEVICE TAX APPEAL NOS. 55227 OF 2013 & OTHERS
MARCH 3, 2016
N. Venkataraman, Senior Advocate, V. Lakshmikumaran, Advocate, Gajendra Maheshwari, Ms. Tripti Dhar, Amuha Sharma, Anurag Soan, R. Satish Kumar, Karan Sachdev and Manish Gaur for the Appellant. Amresh Jain, A.R. for the Respondent.
B. Ravichandran, Technical Member – On 28.7.2015 a Division Bench in interim order No.IO/ST/142-154/2015-CU (DB) recorded a Difference of Opinion on the following issues:
|‘(a)||Whether, Member (Judicial) is correct for holding that post 2006, wherever appellants are paying service tax under the category of “business Auxiliary Services”, or “Business Support Services” for providing passive infrastructure, the appellants are entitled to take Cenvat Credit on towers, pre-fabricated shelters parts thereon etc. in the light of the decision of this Tribunal in the case of GTL Infrastructure Ltd. (supra) and Reliance Infratel Ltd. (supra), or;|
|Member (Technical) is correct in holding that post 2006, wherever appellants are paying service tax under the category of “Business Auxiliary Services”, or “Business Support Services” for providing passive infrastructure, the appellants are not entitled to take Cenvat Credit on towers, pre-fabricated shelters parts thereof etc. in the light of the decision in the case of Bharti Airtel Ltd. (supra)|
|(b)||Whether Member (Judicial) is correct in holding that in Appeal No.ST/777/2009, the appellant is entitled to take Cenvat Credit to the tune of Rs.2,59,95,327/- on shelters/parts as capital goods wherein the supplier has paid Excise duty on these items by classifying under Chapter 85 of the Central Excise Tariff Act, 1985, or;|
|Member (Technical) is correct in holding that in Appeal No.ST/777/2009, the appellant is not entitled to take Cenvat Credit to the tune of Rs.2,59,95,327/- on shelters/parts as capital goods wherein the supplier has paid Excise duty on these items by classifying under Chapter 85 of the Central Excise Tariff Act, 1985′.|
2. By Miscellaneous Order No.52850 to 52853 of 2015 dated 30.7.2015, a Learned Division Bench directed that the appeals in which the difference of opinion dated 28.7.2015 was recorded, be heard by a Larger Bench of three Members and that ST Appeal Nos.55227/2013, 51115, 51211, 51721, 51729, 52377, 52378, 52382/2015, which involve substantially similar issues as arising in the difference of opinion matters, be tagged to be heard by the same Larger Bench. The order dated 30.7.2015 directed that the matters be placed before Hon’ble President for an appropriate decision.
3. When the 21 appeals (13 arising pursuant to the difference of opinion and 8 directed to be tagged along with the 13 appeals) were listed for hearing before the Larger Bench on 3/11/2015, the Respondent/Revenue sought adjournment of the hearing. Hearing of these appeals was therefore adjourned to 8.12.2015. Composition of the Larger Bench had to be reconstituted on account of transfer of one of the Members constituting the Larger Bench to another Regional Bench. Eventually, the Larger Bench heard the respective parties on 25th, 27th and 28th January 2016 and reserved orders on 28.1.2016.
4. We have heard learned Senior Advocate Shri N. Venkataraman and Shri V. Lakshmikumaran, learned Advocate, instructed by Shri Gajendra Maheshwari, Ms. Tripti Dhar, Ms. Amoha Sharma, Shri Anurag Soan, Mr. R. Satish Kumar, Shri Karan Sachdev and Manish Gaur for the several appellants; and the learned A.R. Shri Amresh Jain for the respondent/Revenue.
5. At the hearing of the appeals, Shri Amresh Jain, learned A.R. raised preliminary oral objections, on two counts. It is firstly contended that when a difference of opinion is recorded by a Division Bench the same must invariably be referred for resolution of the difference, to a Third Member and cannot be heard by a Larger Bench comprising three Members. Secondly it is contended that the eight appeals in which no difference of opinion was recorded cannot be tagged to be heard by the Larger Bench constituted for hearing the difference of opinion. Before we proceed to analyze the issues referred and calling for resolution by this Larger Bench, in the several appeals including those that are tagged, we dispose of the preliminary objections orally asserted by the learned A.R.
6. Before the Division Bench on 30.7.2015, Learned A.R. conceded the position that the difference of opinion could be referred to a Larger Bench (and not invariably to a third Member), for resolution. This fact is recorded in para 3 of the order dated 30.7.2015. The only contention that was pressed on behalf of Revenue at that hearing was regarding the necessity of tagging the eight appeals (which are not involved in the difference of opinion) for hearing by a Larger Bench. This aspect also stands considered and answered in paragraph 5 of the order dated 30.7.2015. Further the provisions of Section 129 C of the Customs Act, 1962 read with provisions of Section 35 D(1) of the Central Excise Act, 1944 and Section 86(7) of the Finance Act, 1994 clearly inhere a plentitude of power, authority, discretion and concomitant jurisdiction for constitution of Benches of appropriate strength, reference of appeals to such Benches and tagging connected appeals to be heard together. The decision of the Apex Court in ITAT v. Dy. CIT  218 ITR 275 is conclusive on this aspect. The observations of the Supreme Court in para 14 of this judgment being apposite, are reproduced:
’14. Consequently, the Division Bench of the High Court with respect was in error when it took the view that a Special Bench can be constituted by the President only pursuant to a judicial order and not in exercise of his administrative powers. It is of course true that in any pending matter before a Bench of two learned members, if it is felt by the learned members that a Special bench is required to be constituted, they can pass a judicial order in the light of the procedure laid down by Regulation 98(A). But such a situation had never arisen on the facts of the present case. We have already seen above that the two learned members had recommended to the President to constitute a Special Bench for resolving the controversy centering round the construction of Section 115-J of the Income Tax Act by their communication dated 25th September 1992. That was styled as a reference under Section 255(3) of the Income Tax Act. It was merely a recommendation for invoking the administrative powers of the President under Section 255(3) for constituting Special Bench. It was certainly not a reference under Section 255(3) read with Regulation 98(A). We fail to appreciate how the High Court in exercise of its power under Article 226 of the Constitution could sit in appeal or judgment over the administrative decision of the President who might have felt that the case was of all India importance and was required to be decided by a larger Bench of three members. Such an administrative order is not open to scrutiny under Article 226 of the Constitution of India except in extraordinary cases wherein the order is shown to be a mala fide one. No such allegation was made by the Department against the President of the Tribunal on the facts of the present case. It may be that the President of the Tax Bar Association might have initially moved in the matter or it may be that the two learned members of the Tribunal might have suggested to the President to place listed four matters before a Special Bench. But being so apprised of the situation if the President felt that the present three matters moved by the concerned three respondents in these proceedings involved the same points and which were required to be thrashed out by a Special Bench we do not see any reason for holding that the constitution of a Special Bench by the President for deciding present three matters was an illegal or unjudicious exercise or an exercise based on whims and fancies the President. The Division Bench of the High Court on the facts of this case appears to have been uncharitable to the President of the Tribunal when it observed as aforesaid. It is also difficult for us to appreciate how the High Court could persuade itself to hold that when none of the Benches of the Tribunal had made any reference by judicial order the President of the Income Tax Tribunal was not competent to constitute a Special Bench. As we have already noted above Special Benches can be constituted by the President both in exercise of his administrative powers under Section 255(1) read with Section 255(3) as also on the basis of a judicial order passed by any Bench of the Tribunal making reference to the President in that connection under Regulation 98(A). But it is not as if that such a reference by the members under Regulation 98(A) by passing a judicial order is the only mode and manner in which the President can be moved to constitute a Special Bench. Even independent of such a reference on the judicial side the President can in an appropriate case even suo motu may move in the matter and can constitute a Special Bench of course on appropriate and germane grounds. It is however, true that the President in exercise of its administrative powers under Section 255(3) cannot just constitute a Special Bench without any rhyme or reason. Such an administrative exercise can be demonstrated to be unreasonable, capricious or mala fide on a given set of facts. But in our view present case was not of that type. There was a conflict of opinion between two Benches of the Tribunal, namely, Madras and Hyderabad Bench. It is, however, true that Madras Bench decision was by a single member while the Hyderabad Bench decision was by a Division Bench. Still it could not be said that there was no conflict of decisions between two Benches of the Tribunal. That itself constituted a rational and valid ground for the President to act in exercise of his administrative powers to constitute a Special Bench if he thought it fit to do so. Such an exercise on the facts of the present case cannot be styled as an arbitrary or whimsical or fanciful one as wrongly and uncharitably assumed by the Division Bench of the High Court.’
7. Shri Amresh Jain, learned A.R. has placed reliance on decisions of the Gujarat High Court in Colourtax v.Union of India 2006 (198) ELT 169 (Guj.); of the Rajasthan High Court in Mohammad Asgar Mugal v.Jahuruddin Mugal 2010 (257) ELT 492 (Raj.); and the Gujarat High Court in Suo Motu v. Gujarat High Court Advocates’ Association 2015 (320) ELT 564. In these decisions, the observations and conclusions recorded were in the context of the facts and circumstances and in the specific context arising therein. The binding precedents, of the constitution Bench in Central Board of Dawoodi Bohra Community v. State of Maharashtra  2 SCC 673, Union of India v. Paras Laminates (P.) Ltd. 1991 taxmann.com 31 (SC); (a decision pronounced in context of the Appellate Tribunal) or in the ITAT case (supra) were neither adverted to nor distinguished, in the judgments relied upon by Revenue. The decision to tag eight appeals along with appeals involved in the difference of opinion, was pronounced in order dated 30.7.2015. As far as we are advised, the said decision has become final as the same was not reversed by any appellate forum. Pursuant to the order dated 30.7.2015, the President constituted the Larger Bench on 01.09.2015. The composition was thereafter altered since one of the Members of that Bench was transferred to another Regional Bench before effective hearing could take place.
8. For the aforesaid reasons, we reject the preliminary objections.
9. As already mentioned there are two sets of appeals now considered by this Larger Bench. The first one was consequent upon interim order No. 142-154/2015 dated 28/07/2015 referring a difference of opinion between Members of the Division Bench. We take up the issue referred to in the said interim order for decision. Two points for difference of opinion were referred to us. The first one is as below :-
|‘(a)||Whether, Member (Judicial) is correct for holding that post 2006, wherever appellants are paying service tax under the category of “Business Auxiliary Services”, or “Business Support Services” for providing passive infrastructure, the appellants are entitled to take Cenvat credit on towers, pre-fabricated shelters parts thereon etc. In the light of the decision of the Tribunal in the case of GTL Infrastructure Ltd. (supra) and Reliance Infratel Ltd. (supra), or ;|
|Member (Technical) is correct in holding that post 2006, wherever appellants are paying service tax under the category of “Business Auxiliary Services”, or “Business Support Services” for providing passive infrastructure, the appellants are not entitled to take Cenvat credit on towers, pre-fabricated shelters parts thereon etc. In the light of the decision in the case of Bharti Airtel Ltd. (supra).’|
10. We have perused the orders prepared by Member (Technical) and Member (Judicial) which led to the above-mentioned difference of opinion. The core issue is the eligibility of the appellants for credit of duty paid on MS Steel Angles/Towers, pre-fabricated shelters and parts thereon. The Division Bench had agreed on the view that the appellants before them were not eligible for credit of duty on towers and cabins if they are providing telecommunication service as output service. This conclusion was following the decision of Hon’ble Bombay High Court in Bharti Airtel Ltd. v. CCE [C.E.A. No.73 of 2012, dated 26-8-2014]. However, when the appellants are providing output service of ‘business auxiliary services’ or ‘business support services’ to the telecommunication companies, such credit of duty on tower parts and pre-fabricated shelters is held to be eligible by the Member (Judicial) and as not so, by the Member (Technical).
11. Learned Counsel for the appellants submitted elaborately on this issue. The submissions covered all issues including on the above-mentioned difference of opinion. The summary of various contentions is as below :—
|(i)||Towers, Shelters and Tower materials are all parts of Base Transmission System (BTS) classifiable under Tariff Heading 8517 and, hence, all components, spares and accessories thereof would qualify as capital goods in terms of Rule 2 (a) (A) (iii), whether or not such components, spares and accessories only fall under Chapter 85. The towers and shelters are all components of BTS ;|
|(ii)||Credit on towers and shelters and other materials cannot be denied on the ground of immovability. As per Rule 3 of Cenvat Credit Rules, credit is admissible on all inputs and capital goods which are received in the premises of service provider. In the present case, towers and shelters are received in the premises of service providers. Later on when the towers are embedded in earth the eligibility of credit will not change ;|
|(iii)||credit of input services cannot be denied on the ground of immovability ;|
|(iv)||Credit in case of pre-fabricated buildings/shelters classified under Chapter 85 would qualify as capital goods. The duty paid documents clearly indicated the classification and, as such, the credit cannot be denied at the recipients end ;|
|(v)||Towers and shelters would qualify as ‘inputs’ themselves. This is made as an alternate submission. Rule 2 (k) (ii) defines inputs as “all goods used for providing output services”. There is no bar to indicate that goods which do not fall under the category of capital goods would not also qualify as inputs ;|
|(vi)||Towers and shelters are to be considered as ‘accessories’ of capital goods. For an item to fall under the category of ‘components’, ‘spares’ and ‘accessories’ it must be either a component or a spare or an accessory and the classification of such item is immaterial. The towers and shelters would qualify as accessories. Without the tower the active infrastructure, namely antenna, cannot be placed on that altitude to generate uninterrupted frequency ;|
|(vii)||There is no breaking of Cenvat chain as the appellants are paying duty on towers and shelters in CKD condition. These are simply installed on a foundation by contractors. These contractors issue invoices for payment of service tax. There is no loss of identity of goods during the course of erection.|
12. The learned Counsels representing the various appellants placed reliance on the decisions of Hon’ble High Courts and Hon’ble Supreme Court in support of their various above assertions. These are examined later in this order.
13. The learned AR appearing on behalf of Revenue submitted that :—
|(a)||the issue relating to eligibility of towers and shelters for Cenvat credit has been clearly settled by the Hon’ble Bombay High Court in Bharti Airtel Ltd. (supra). The categorical finding after elaborate analysis by the Hon’ble High Court has not been deviated by any other High Court or over ruled by Hon’ble Supreme Court ;|
|(b)||The Central Excise duty paid on MS Angles, Channels and pre-fabricated buildings are claimed as credit by the appellants. These items have no direct nexus to the output service of either telecommunication service or business support service. It cannot be said that iron and steel articles are used for providing telecommunication service. It is the immovable tower which is used for providing telecommunication service or business support service ;|
|(c)||The CBEC vide Circular dated 04/1/2008 clarified that input of credit of service tax can be taken only if the output is a service liable to Service Tax or goods liable to excise duty. Since immovable property is neither service nor goods no credit can be taken.|
14. The learned AR also relied on certain case laws in support of his afore-mentioned assertions. These are examined later in this order.
15. We have heard both the sides elaborately and perused the appeal records as well as various decisions relied upon by both the sides. The first point for decision is whether credit of Central Excise duty paid on MS steel parts/towers and pre-fabricated shelters are available to infrastructure companies providing output service of “business support service” or “business auxiliary service” to telecommunication companies, which in turn provide telecommunication service. The first issue to address is whether the legal principles and ratio applicable to decide such credit availability will be same for both categories of providers namely those who provide telecommunication service [cellular mobile service companies] and those who provide merely infrastructure support by way of taxable service falling under ‘business support service’ or business auxiliary service. Schematically the position can be shown as below :-
The scope of Cenvat credit scheme :- The Cenvat credit scheme as envisaged under Cenvat Credit Rules, 2004 is essentially to avoid cascading effect of taxation i.e. not to levy tax on tax. In other words, tax is sought to be levied on the quantum of value addition at each stage of manufacturing or/and service chain. A manufacturer of dutiable goods or a provider of taxable service can avail credit of duty/tax paid on ‘inputs’, ‘capital goods’ or ‘input services’. These three terms are defined in the Rules and the credit availability is predicated on fulfillment of conditions mentioned therein for goods or services to fall in one of these categories. Credit taken on these goods/services can be used to discharge tax on output services.
Credit on Capital Goods :- Rule 2 (a) defines ‘capital goods’. It is apparent that capital goods as understood in commercial parlance or industrial circles cannot be automatically considered as capital goods for the purpose of Cenvat Credit Rules. To be ‘capital goods’ the goods should fall in any one of the categories mentioned in the definition. The definition relevant to the issue now under consideration, is “all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, Heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the 1st Schedule to the Central Excise Tariff Act”; and “components, spares and accessories of these goods”. It is clear that capital goods should fall under the specified tariff classification for eligibility to duty credit. However, there is no such restriction for the components, spares and accessories of such capital goods.
16. The central point of dispute is that the appellants are getting duty paid MS Angles, Channels etc. to the required site and getting them erected into a tower on a concrete foundation. It is the contention of the appellants that they are buying the towers in a CKD condition. It is an admitted position that MS angles and channels coming as MS angles/channels or cleared as a set of CKD towers, as claimed by the appellant, fall to be classified under Chapter 73. On this basis, these are excluded from the definition of capital goods. Similarly, pre-fabricated shelters falling under Chapter 94 also fall outside the purview of the definition of capital goods.
Towers and Shelters claimed as accessories of other capital goods :- An alternate argument Counsel for the appellant is that towers and pre-fabricated shelters ought to be considered as “Accessories” of overall Base Transmission System (BTS) which is classified under Tariff Heading 8517. Learned Counsel during oral argument and in written submissions, elaborated on this aspect with the support of interpretative Rules for the Tariff and Section Notes. We find that the question whether this alternate argument is legally tenable has already been examined by the Hon’ble Bombay High Court in Bharti Airtel Ltd. (supra). A distinction is sought to be made now that the Hon’ble High Court had inter-changeably referred to parts, components and accessories which does not reflect the correct scope of these terms. Learned Counsel urged that an ‘accessory’ is having a different scope than a ‘component’ or ‘a part’. We have examined this aspect as analyzed by the Hon’ble Bombay High Court. The High Court observed that all the three terms – “components”, “spares” and “accessories” – used in sub-Clause (A) (iii) of clause (a) of Rule 2 should be understood as standing for movables only. It was held by the Larger Bench of this Tribunal in Vandana Global Ltd. v. CCE  26 STT 379 (New Delhi – CESTAT) that “capital goods” defined under the Cenvat Credit Rules must be excisable goods. Hence, the Hon’ble High Court concluded that the argument of the learned Counsel with reference to the term ‘accessory’ cannot be accepted. We further note that the Hon’ble High Court examined the decision of the Hon’ble Supreme Court in CCE v. Rajasthan Spinning & Weaving Mills Ltd. 2010 (255) ELT 481, Saraswati Sugar Mills v. CCE 32 STT 469 (SC), Annapurna Carbon Industries Co. v. State of Andhra Pradesh 1976 taxmann.com 51 (SC), the Larger Bench decision in Banco Products (India) Ltd. v. CCE 2009 (235) ELT 636 (Trib. – Ahd.) to conclude that tower being admittedly an immovable structure cannot be an accessory of any kind of instrument.
17. Apart from the above ratio, we find that to become an accessory of a capital goods there should identified capital goods. The claim of the appellant is that BTS is a capital goods and the towers and shelters would be it’s accessory. We find that no BTS as identified capital goods emerges in the present case. Towers and shelters are erected and fixed at the desired site. The BTS electronic equipment is brought and installed in the site. Thesetowers and shelters no doubt become part of the overall infrastructure created at site. However, to term thetower and shelter as an accessory of BTS is not sustainable. Various accessories can be considered alongwith BTS to become part of overall capital goods. Such proposition is not however applicable to towers and shelters as they are erected at site, installed as permanent structures and are used for installing/housing the telecom equipment.
The question of Immovability of tower and its relevance :-
The appellants contended that
|(a)||set of steel items cleared as towers have suffered duty as “towers”.|
|(b)||even after erection at site on a cement concrete foundation they continue to be goods or in other words do not become immovable property.|
18. This aspect regarding the material status of towers and shelters have been examined in detail by the Hon’ble Bombay High Court in Bharti Airtel Ltd. (supra). On the first point it is clear even if it is admitted that suchtowers are cleared in a full sets of angles, channels (in a CKD condition) the classifications still continues to be under Chapter 73 which is excluded from the definition of capital goods. The second question is whether towersand shelters are immovable property or goods for excise purposes. As already stated this aspect was in fact the main issue decided by the Hon’ble Bombay High Court in Bharti Airtel Ltd. (supra). The Hon’ble High Court after elaborate analysis of various relied upon case laws came to the categorical conclusion that towers and parts thereof and shelters are not capital goods and are also not inputs. The Hon’ble High Court observed that towersare immovable structures and ipso facto non-marketable and non-excisable.
19. On the nature of tower being “goods”, learned Counsel argued that the Bombay High Court in Bharti Airtel Ltd. (supra) dealt with an admitted fact of immovability of such towers. In the present appeals no such admission is made by appellants. In fact they are claiming that tower parts in sets are being cleared by the supplier in CKD condition. It was argued that, in modern day technology fabricating a tower at a site, where all components are cut and made to a particular design will involve only a simple integration by bolts and nuts though a base has to be secured to the concrete platform by embedding. The erection at site and embedding thetower in the concrete platform are only for convenience of easy transport. Learned Counsel contended that whether a product or a thing is movable goods or a immovable property is a question of fact. It is submitted thattowers in their case are not immovable property and hence continue to be goods for excise purpose.
20. We find here the Hon’ble Bombay High Court while deciding the admissibility of credit on such towers did not go by the concession or admission made by the appellants alone. The nature of tower, its fabrication and the resultant structure has been elaborately discussed as can be seen in the order. It will not be correct to say that the Hon’ble High Court did not examine the relevant criteria or the legal principle in arriving at the finding of immovability in respect of these towers. The fact that towers can be dismantled, moved and re-erected at another location by itself does not make them movable goods. Steel angles, bolts, nuts are brought and fabricated into an embedded tower. These can be dismantled in to angles and channels, nuts and bolts, substantially restoring to the original condition of the raw material. However, what is transported are “angles and channels”. The towers when they are embedded are considered as immovable property. This ratio has, in our considered view, been adopted by the Hon’ble Bombay High Court in Bharti Airtel Ltd. (supra).
21. Learned Counsel relied on the Hon’ble Supreme Court’s decision in CCE v. Solid & Correct EngineeringWorks 2010 (252) ELT 481. The Supreme Court was examining excise duty liability of asphalt drum hot mix plant. The Court examined Section 3 (26) of the General Classes Act with reference to “Immovable Property”. The term “attached to the earth” has been examined with reference to Section 3 of Transfer of Property Act. The Hon’ble Apex Court concluded that any plant which is fixed by nuts and bolts to a foundation, wherein there is no assimilation of the machinery with a structure permanently and the civil foundation was only necessary to provide a wobble free operation of the machine, the test of permanency would fail. We have carefully perused the Apex court order in this case. The Apex court held that the hot mix plant which is specifically covered under Plant and Machinery Tariff Heading 8474 are manufactured and brought. The point decided by the Apex court was whether setting up of such plant and machinery would amount to manufacture liable to Central Excise. First of all, in the present case we have no admitted capital goods brought for installation or erection in the desired site. The towers and their components cleared as angles and channels or as set of angles in CKD condition are cleared after duty payment by the manufacturer under Chapter 73, which is an excluded chapter for capital goods. As such, there is no movable capital goods which are otherwise eligible for Cenvat credit which are being denied such credit only applying the test of immovability.
Tower Parts (MS Channels, Angles etc.) as “Inputs” for availing credit :- An alternate claim has been made by the appellants to allow Cenvat credit paid on structural parts/towers/ shelters treating them as inputs in terms of Rule 2 (k) (ii) which allows credit of all goods used for providing output services. It was argued that there is no bar for goods which do not fall under the category of capital goods to qualify as inputs. Reliance was placed on the Larger Bench decision in Union Carbide India Ltd. v. CCE 1996 taxmann.com 597 (CEGAT – New Delhi). In this ruling, Tribunal considered spare parts of machines to be eligible for credit as inputs under Modvat scheme. In Tata Engineering & Locomotive Co. Ltd. v. CCE 1993 taxmann.com 187 (CEGAT – New Delhi), the Tribunal held that credit on the machines which stand excluded is available under input category. We have examined the appellant’s plea in the light of decided cases. In the present case, duty paid items are MS Angles and Channels/Shelters which are brought to the site installed/erected and further put to use for mounting/installing telecommunication antenna and other equipment. It is necessary to decide whether duty paid MS angles/shelter are used by infra companies for providing business support service to telecom companies or for providing telecom service by telecom operators. This will bring us to the next question relevant to decide this issue.
Question of nexus and Cenvat credit flow :- The duty payment is on MS angles, channels (or towers in CKD as claimed by the appellants) and pre-fabricated shelters. The credit of this duty is claimed. The admitted basic requirement for eligibility of any duty credit is that goods on which duty is paid (credit of which is claimed) should have a connection or nexus to the output service. The credit availed on input is used for discharging tax on output service. In the present case, the duty paid MS angles, channels etc. are brought to the site, fabricated into towers on a concrete platform. Similarly, the duty paid pre-fabricated shelters are brought and fixed to the ground base firmly. On such towers, the antenna or dish are fixed and connected by cables to electronic equipment housed in the pre-fabricated shelter on the ground. It is apparent that these duty paid items are not used for providing telecommunication service. The telecommunication service is provided by using erected and fixed towers and shelters. The inputs like MS Angles and Channels have gone into the making of such towerswhich in turn are used for providing infra-support service/telecom service. To apply the term “used for” in the definition for inputs, there should be a nexus between the inputs goods and the output service. In the present case the manipulation/fabrication of raw materials involved in erection and installation, fixing of towers and shelters will render such nexus tenuous. If the claim of the appellant is to be accepted, the credit can be even extended to duty paid MS Ingots if procured by the appellants to get the MS Angles manufactured which in turn used for erection of tower which in turn is used for providing telecom service. It is clear that such far remote linkages are not within the scope of the term “used for”.
22. Learned Counsel also relied on decision of Hon’ble Supreme Court in CCE v. Hyundai Unitech Electricals Transmission Ltd. 2015 (323) ELT 220. In the said case the Hon’ble Supreme Court held that doors and electrical boxes are components and/or parts of wind operated electricity generators. Learned Counsel submitted that towers of wind mill generator stand on a similar footing to the towers now in dispute and these should be considered as parts of overall BTS. We have examined the said decision as well as the Tribunal’s decision which was considered by the Supreme Court. It is clear that the Tribunal was considering the scope of terms “wind operated electricity generator, their components and parts thereof”. Applying the principle in a Customs case of import of such towers, the Tribunal held the assessee eligible for exemption on such towers as parts. The Tribunal in Customs case Bharat Heavy Electricals Ltd. v. Collector of Customs 1999 taxmann.com 993 (CEGAT – New Delhi) examined the technical literature of imported wind mill generator/tower to arrive at the decision. Here, it is the assertion of appellants that the tower should be considered as part of BTS. The integrated BTS is never cleared as excisable item. The various tower structures are erected at site and integrated to create the required infra-structure. Hence, the decision of the Hon’ble Supreme Court that doors and electrical boxes are to be considered as parts of electricity generator is not of any help to appellants.
Applicability of ratio followed for telecom companies to infrastructure companies :- On the above analysis, the first point for difference of opinion referred to this Larger Bench relating to non-applicability of the decision of the Hon’ble Bombay High Court in Bharti Airtel Ltd. (supra) to infrastructure companies to provide business support service to telecom operators can be examined. We find in the normal course the nature of output service should not have any bearing to decide credit eligibility on capital goods now under dispute. A distinction was sought to be made that the decision of Hon’ble Bombay High Court was applicable only to active telecom service providers and not to providers of passive infrastructural support to such telecom operators. Reliance was sought to be placed on the decision of the Tribunal in GTL Infrastructure Ltd. v. CST [Final order No. A/1368/2014-WZB/C-I(CSTB), dated 22-8-2014] and Tribunal’s final order Nos. A/382-383/2015 dated 26/11/2014 in Reliance Infratel Ltd. v. CST. We have perused the GTL Infrastructure Ltd. (supra) decision. In the said decision it was mentioned that towers/BTS Cabins were used for providing business auxiliary service and, hence, Cenvat credit cannot be denied. Further, reliance placed by the Original Authority on Explanation II and Rule 2 (k) (i) was found to be incorrect as the same dealt with a manufacturer and not a service provider. The Tribunal was referring to its earlier order in Bharti Airtel Ltd. v. CCE  34 STT 592 (Mum.) and observed that the said case dealt with facts which are totally different. It was found that since appellants were allowing the operators right to install antenna and BTS equipments and rendering an output service under business auxiliary service they were eligible for credit. We find that this decision of Tribunal is not based on a proper appreciation of the ratio of the Hon’ble Bombay High Court. The Hon’ble Bombay High Court order in Bharti Airtel Ltd. (supra) was not available to the Tribunal while deciding GTL Infrastructure Ltd. (supra). The tower and BTS Cabin are used for providing output service, here business auxiliary/support service but the question is, is there any duty claimed as credit paid on tower or BTS Cabins as installed at site. These items cannot be considered as inputs as they were held to be immovable property. The inputs which suffered duty like MS angles and pre-fabricated shelters, per se, were not used for providing output service. In other words there is a tower and cabin structure erected and embedded before such support service could be provided to the telecom operators.
23. It is necessary to note that before infrastructure companies came into the picture, telecom operators themselves were putting up such infrastructure and using the same to provide telecom service. In other words, in the absence of infrastructure companies as an intermediary, telecom companies themselves created such infrastructure and “provided” such business support service to self. The issue of service tax liability in such situation on business support service is not raised because there are no two persons as a provider or recipient of such service. In a sense such service was to the self. Considering such factual matrix, we find that no distinction could be made between the telecom operators and the infrastructure companies in deciding the eligibility of Cenvat credit on the impugned items now under consideration.
24. Further, it was contended by the appellants that even if towers shelters and other materials are held to be immovable property, credit cannot be denied on them. Reliance was placed on the decision of Hon’ble Andhra Pradesh High Court in CCE v. Sai Sahmita Storages (P.) Ltd.  34 STT 306, Hon’ble Gujarat High Court decision in Mundra Ports and Special Economic Zone Ltd. v. CCE [Tax Appeal No. 15 of 2009, dated 29-4-2015] and Hon’ble Punjab & Haryana High Court decision in Commissioner of Central Excise Commissionerate v. Bellsonica Auto Components India (P.) Ltd.  60 taxmann.com 196. In Sai Sahmita Storages (P.) Ltd. (supra), the Hon’ble Andhra Pradesh High Court held that there is no dispute that the assessee used cement and TMT bar for providing storage facility without which storage and warehousing services could not have been provided. The question relating to creation of an immovable asset and the implication of Cenvat credit flow in such situation was not examined in detail in the said order. Similarly, the Hon’ble Gujarat High Court also arrived at similar conclusion. It is seen the Hon’ble Punjab & Haryana High Court in Bellsonica Auto Components India (P.) Ltd. (supra) was dealing with credit availability on input service paid on construction of civil structure. In the present case, we are dealing with credit eligibility of goods, either as inputs or as capital goods. Further, with due respect to these decisions, it is to be noted that the very same matters covered in the present appeals are discussed elaborately on a similar set of facts by the Hon’ble Bombay High Court in Bharti Airtel Ltd. (supra). When there is a detailed examination and ruling on identical set of facts by the Hon’ble High Court, the same are to be followed. Further, the Hon’ble Bombay High Court reiterated their findings arrived inBharti Airtel Ltd. (supra) in the case of Vodafone India Ltd. v. CCE  61 taxmann.com 327 (Bom.). The Hon’ble Bombay High Court examined various contentions now raised in these appeals and reiterated their findings recorded earlier in Bharti Airtel Ltd. (supra).
25. In such a situation and in the absence of any material before us to distinguish the said ratio vis-à-vis the fact of the present case we find the ratio of the Hon’ble Bombay High Court as laid down in Bharti Airtel Ltd.(supra) and Vodafone India Ltd. (supra) should be followed. Hence, first point of difference is answered against the appellant and in favour of Revenue.
26. The second point of difference of opinion referred to the Larger Bench is regarding the eligibility of the appellant to the credit on shelters and parts as capital goods. We find that our preceding analysis regarding ineligibility of credit on towers and shelters is equally applicable to the said items. The only reason for claiming the credit on shelters and parts is their classification under Chapter 85. We find that a particular classification of duty paid item by itself does not make the item eligible for Cenvat credit. The eligibility of credit is determined by the provisions of Cenvat Credit Rules. By classifying a product and paying duty under a particular heading, an automatic claim for such credit for that item cannot be made. The eligibility of any item for credit is to be decided as per provisions of Cenvat Credit Rules, 2004. As discussed elaborately hereinabove shelters were found to be not eligible for Cenvat credit either as capital goods or as inputs and as such some supplier classifying the product under Chapter 85 by itself does not make them eligible for credit if they are otherwise not entitled for the same. Learned Counsel contended that the denial of credit as held by Hon’ble Bombay High Court is only on classification of these shelters. We find that the Hon’ble High Court categorically held thattowers and PFB are in the nature of immovable goods and are non-marketable and non-excisable. Further, we find that the analogy drawn by learned Counsel with plant and machinery to the present issue is not correct. The plant and machinery classifiable under specific tariff heading are manufactured and cleared on payment of duty as such machinery. Here, the facts are clearly different. Accordingly, the second point of reference is also answered against the appellant and in favour of Revenue.
Justice G. Raghuram, President – I had the benefit of the draft opinion prepared by the Hon’ble Member (Technical) Shri B. Ravichandran, in the batch of thirteen appeals arising pursuant to a difference of opinion recorded in No. I.O./ST/142 to 144/2015-CU (DB) dated 28.07.2015, by a ld. Division Bench of the Tribunal. Eight connected appeals were directed to be tagged to those appeals, for being heard by a larger Bench, by the order dated 30.07.2015. The larger Bench was constituted by the President, CESTAT.
28. I am in respectful agreement with the conclusions recorded in the draft opinion drawn up by the Hon’ble Member (Technical). I however record separate reasons, on some aspects and in brief, for doing so.
29. The essential issue involved in all appeals (those arising out of the difference of opinion and those tagged to be heard along therewith, as well) is regarding entitlement to avail Cenvat credit on telecom towers, shelters and parts or components thereof, for remittance of service tax on the taxable output services provided by appellants. The appellants provide telecom towers and shelters to telecom services providers, on lease basis. Whether appellants are entitled to avail Cenvat credit of excise duty paid on telecom towers, shelters and parts for remittance of service tax on the taxable services of, “Business Auxiliary Service” (BAS) or “Support Services of Business or Commerce” (BSS) as the case may be, to telecom service providers, is thus the core issue that falls for our determination.
30. In Bharti Airtel Ltd. (supra) followed in the decision in Vodafone India Ltd. (supra), the Hon’ble Bombay High Court concluded (in the context of availment of Cenvat credit of duty, paid on towers shelters and parts, by telecom service providers, for remittance of service tax on the rendition of telecom service), that towers and shelters have become immovable property and whether they be treated as components, parts or accessories, credit cannot be availed.
31. In these appeals, ld. Counsel for the several appellants urge that there is a clear distinction between availment of Cenvat credit on towers, shelters and parts by active telecom service providers (as was the case in the rulings of the Bombay High Court in Bharti Airtel Ltd. and Vodafone India Ltd. (supra) and the facts in the present batch of appeals, since appellants, herein are all passive infrastructure providers, i.e., provide the infrastructure of towers and pre-fabricated shelters, on a tenured lease basis to telecom service providers, for eventual rendition by the later of the taxable telecom services and in the process provide the taxable “BAS” or “BSS”, as the case may be, to telecom companies.
32. During the period in issue, the relevant provisions of Cenvat Credit Rules, 2004 defined “capital goods”, to the extent material and relevant, as:
All goods falling under Chapters 82, 84, 85 and 90 of the First Schedule to the Excise Tariff Act (rule 2(a)(A)(i)]; and
Components, spares and accessories of the goods specified in clause (i) (rule 2(a)(A)(iii)].
“Input” is defined to mean all goods, except light diesel oil etc. used in providing any output service (rule 2(k)(iii)].
Rule 3 of the 2004 rules authorises a provider of taxable service to take credit of specified duties paid on any input or capital goods received in the premises of the provider of the output service.
33. For entitlement of credit on towers, shelters or parts thereof, it is therefore essential that these should be goods and should fall, either within the ambit of capital goods specified in Rule 2(a)(A)(i) of the rules, namely goods falling under Chapters 82, 84, 85 or 90 or to components, spares or accessories of goods specified in sub-clause (i). Even for availing credit as “inputs”, towers, shelters or components thereof should be goods and used for providing an output service. These are conditions precedent for availment of Cenvat credit, on duty paid on these goods, for remittance of service tax on the output services rendered, whether the output service is “BAS” or “BSS” (in the case of passive infrastructure providers) or “Telecom Services” (in the case of active infrastructure providers, namely where the telecom companies themselves own the infrastructure used for rendition of telecom services).
34. The seminal issue is thus whether M.S. steel angles / towers, pre-fabricated shelters and parts thereof, on which duties are paid (admittedly) continue to be goods, notwithstanding their erection at a site / location, with a view to provide infrastructural support for BTS, for rendition of telecom services. Integral to this issue is whether towers and shelters continue to bear the character of goods even after erection and installation at the site, by affixture by bolts or foundation plates to concrete foundations. In what circumstances, conditions or factual matrixes plant, equipment or machinery cease to be goods and transmutes to immovable property, we notice a divergence in curial interpretation.
35. In the factual context of towers and shelters owned by active infrastructure service providers, the Mumbai Bench of the Tribunal in Bharti Airtel Ltd. v. CST  20 STR 401 (Trib. – Mum.) ruled that Cenvat credit could not be availed. This ruling was predicated on the position admitted by appellants therein that towers and shelters are immovable property. This conclusion was upheld by the Hon’ble Bombay High Court in Bharti Airtel Ltd. (supra). In Central Excise Appeal No. 126/2015 in Vodafone India Ltd. (supra) and batch, the High Court followed its earlier decision in Bharti Airtel Ltd. (supra). Cenvat credit was however allowed by the Mumbai Bench of the Tribunal in GTL Infrastructure Ltd. (supra); in Reliance Infratel Ltd. v. CST [Service tax Appeal Nos. 88497 and 85682/2014] and in Essar Telecom Infrastructure Ltd. and Reliance Communication Infrastructure Ltd. v. CST [Order Nos. A/1356-1357/15/STB, dated 30-4-2015].Earlier, in CCE v. Hutchison Max Telecom (P.) Ltd. 2008 (224) ELT 191 (Bom.), the Hon’ble High Court concluded that towers are immovable property.
36. In State of A.P. v. Bharat Sanchar Nigam Ltd.  33 STT 553 (AP.) the issue was regarding validity of levy of sales tax, under the provisions of the A.P. VAT Act, 2005, inter-alia on sharing of telecom infrastructure. On facts, in the A. P. Case, some telecom companies erected towers on sites and permitted other similar service providers to fix their antennas on the towers and thus shared the infrastructure, for which a monthly infrastructure share fee was received, towards consideration. In para 44 of this judgment, Hon’ble High Court concluded that since telecommunication towers of a height of around 90 mtrs. are embedded either to the earth or to the rooftop of a building and fastening of such huge structures was necessitated, these are excluded from the ambit of “goods “and constitute “immovable property”; and since transfer of the right to use immovable property does not fall within the scope of the VAT Act, there is no liability to tax thereunder. This decision did refer to the decision of the Supreme Court in CCE v. Solid & Correct Engineering Works  5 SCC 122, to conclude that to constitute immovable property there should be no mobility and the test of permanency is whether the chattel is movable to another place of use in the same position, or is liable to be dismantled or re-erected at a later place. The High Court concluded that 90 mtrs. hugetowers can be erected at another place only after being completely dismantled at the existing site and cannot be moved to another place of use in the same position; and consequently are immovable property but not goods, liable to tax under the A.P. VAT Act.
37. Ld. Counsel for the assessees before us, strenuously contended that decisions, of the A.P. High Court inBharat Sanchar Nigam Ltd. (supra), of the Bombay High Court in Bharti Airtel Ltd. (supra) and in VodafoneIndia Ltd. (supra) have incorrectly appreciated and applied the ratio regarding the character of towers and shelters (as not amounting to immovable property), deducible from the judgment in Solid & Correct Engineering Works (supra).
38. In Solid & Correct Engineering Works (supra), the decision was rendered on the basis of a contention by the assessees therein that manufacture of parts and components for road and civil construction machinery and equipment, like asphalt drum/ hot mix plants and asphalt paver machines etc. are not excisable to the levy of excise duty since even though the setting up of the plant may amount to manufacture of a plant and the plant may be machinery covered by entry 8474, manufacture of the same would not amount to manufacture of “excisable goods” since such plant or machinery need to be permanently embedded in the earth, and are thus immovable property. Whether annextiation of these goods to the earth by fixation on foundations, for ensuring stability of the plant and avoidance of vibration during operations, transform these goods into immovable property and what constitutes immovable property in the circumstances, was therefore the core issue before the Apex Court. To the extent relevant and material for our discussion, the relevant portion of the analysis by the Supreme Court in Solid & Correct Engineering Works (supra), is reproduced below:—
’18. It is not the case of the respondents that plants in question are per se immovable property. What is argued is that they become immovable as they are permanently imbedded in earth in as much as they are fixed to a foundation imbedded in earth no matter only 1½ feet deep. That argument needs to be tested on the touch stone of the provisions referred to above. Section 3 (26) of the General Clauses Act includes within the definition of the term “immovable property” things attached to the earth or permanently fastened to anything attached to the earth. The term “attached to the earth” has not been defined in the General Clauses Act, 1897. Section 3 of the Transfer of Property Act, however, gives the following meaning to the expression “attached to the earth”.
|“(a)||rooted in the earth, as in the case of trees and shrubs;|
|(b)||imbedded in the earth, as in the case of walls and buildings;|
|(c)||attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached.|
19. It is evident from the above that the expression “attached to the earth” has three distinct dimensions, viz. (a) rooted in the earth as in the case of trees and shrubs (b) imbedded in the earth as in the case of walls or buildings or (c) attached to what is embedded for the permanent beneficial enjoyment of that to which it is attached. Attachment of the plant in question with the help of nuts and bolts to a foundation no more than 1½ feet deep intended to provide stability to the working of the plant and prevent vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. It is also not synonymous to imbedding in earth of the plant as in the case of walls and buildings, for the obvious reason that a building imbedded in the earth is permanent and cannot be detached without demolition. Imbedding of a wall in the earth is also in no way comparable to attachment of a plant to a foundation meant only to provide stability to the plant especially because the attachment is not permanent and what is attached can be easily detached from the foundation. So also the attachment of the plant to the foundation at which it rests does not fall in the third category, for an attachment to fall in that category it must be for permanent beneficial enjoyment of that to which the plant is attached.
20. It is nobody’s case that the attachment of the plant to the foundation is meant for permanent beneficial enjoyment of either the foundation or the land in which the same is imbedded.
21. In English law the general rule is that what is annexed to the freehold becomes part of the reality under the maxim quidcquid plantatur solo, solo cedit. This maxim, however, has no application in India. Even so, the question whether a chattel is imbedded in the earth so as to become immovable property is decided on the same principles as those which determine what constitutes an annexation to the land in English law. The English law has evolved the twin tests of degree or mode of annexation and the object of annexation. In Wake V. Halt (1883) 8 App Cas 195 Lord Blackburn speaking for the Court of Appeal observed:
“The degree and nature of annexation is an important element for consideration; for where a chattel is so annexed that it cannot be removed without great damage to the land, it affords a strong ground for thinking that it was intended to be annexed in perpetuity to the land.”
22. The English law attaches greater importance to the object of annexation which is determined by the circumstances of each case. One of the important considerations is founded on the interest in the land wherein the person who causes the annexation possesses articles that may be removed without structural damage and even articles merely resting on their own weight are fixtures only if they are attached with the intention of permanently improving the premises. The Indian law has developed on similar lines and the mode of annexation and object of annexation have been applied as relevant test in this country also. There are cases where machinery installed by monthly tenant was held to be moveable property as in cases where the lease itself contemplated the removal of the machinery by the tenant at the end of the tenancy. The mode of annexation has been similarly given considerable significance by the courts in this country in order to be treated as fixture. Attachment to the earth must be as defined in Section 3 of the Transfer of Property Act. For instance a hut is an immovable property, even if it is sold with the option to pull it down. A mortgage of the super structure of a house though expressed to be exclusive of the land beneath, creates an interest in immovable property, for it is permanently attached to the ground on which it is built.
23. The courts in this country have applied the test whether the annexation is with the object of permanent beneficial enjoyment of the land or building. Machinery for metal-shaping and electro-plating which was attached by bolts to special concrete bases and could not be easily removed, was not treated to be a part of structure or the soil beneath it, as the attachment was not for more beneficial enjoyment of either the soil or concrete. Attachment in order to qualify the expression attached to the earth, must be for the beneficial attachment of that to which it is attached. Doors, windows and shutters of a house are attached to the house, which is imbedded in the earth. They are attached to the house which is imbedded in the earth for the beneficial enjoyment of the house. They have no separate existence from the house. Articles attached that do not form part of the house such as window blinds, and sashes, and ornamental articles such as glasses and tapestry fixed by tenant, are not affixtures.
24. Applying the above tests to the case at hand, we have no difficulty in holding that the manufacture of the plants in question do not constitute annexation hence cannot be termed as immovable property for the following reasons:
|(i)||The plants in question are not per se immovable property.|
|(ii)||Such plants cannot be said to be “attached to the earth” within the meaning of that expression as defined in Section 3 of the Transfer of Property Act.|
|(iii)||The fixing of the plants to a foundation is meant only to give stability to the plant and keep its operation vibration free.|
|(iv)||The setting up of the plant itself is not intended to be permanent at a given place. The plant can be moved and is indeed moved after the road construction or repair project for which it is set up is completed.|
25. We may, at this stage, refer to the decisions of this Court which were relied upon by learned counsel for the parties in support of their respective cases.
26. In Sirpur Paper Mills Ltd. (supra) this Court was dealing with a near similar situation as in the present case. The question there was whether the paper machine assembled at site mainly with the help of components bought from the market was dutiable under the Central Excise Act, 1944. The argument advanced on behalf of the assessee was that since the machine was embedded in a concrete base the same was immovable property even when the embedding was meant only to provide a wobble free operation of the machine. Repelling that contention this Court held that just because the machine was attached to earth for a more efficient working and operation the same did not per se become immovable property. The Court observed:
“5 Apart from this finding of fact made by the Tribunal, the point advanced on behalf of the appellant, that whatever is embedded in earth must be treated as immovable property is basically not sound. For example, a factory owner or a householder may purchase a water pump and fix it on a cement base for operational efficiency and also for security. That will not make the water pump an item of immovable property. Some of the components of the water pump may even be assembled on site. That too will not make any difference to the principle. The test is whether the paper-making machine can be sold in the market. The Tribunal has found as a fact that it can be sold. In view of that finding, we are unable to uphold the contention of the appellant that the machine must be treated as a part of the immovable property of the company. Just because a plant and machinery are fixed in the earth for better functioning, it does not automatically become an immovable property.”
27. In M/s. Narne Tulaman Manufacturers Pvt. Ltd. Hyderabad (1989 (1) SCC 172), this Court was examining whether the assembly of parts of machine by an assessee to bring into existence a weighbridge as a complete machine amounted to manufacture hence liable to duty even when its parts are separately taxable. Answering the question, in the affirmative this court held that the assembling of the components of the weighbridge brought into existence a complete weighbridge which had a distinctive name, character, and use hence excisable to duty. The fact that the assessee was himself manufacturing only one part of the component used in the erection of a weighbridge did not mean that the complete machine once the same was assembled by using duty paid parts was not excisable to excise duty.
28. In Triveni Engineering’s case (supra), the question that fell for consideration was whether a turbo alternator comprising two components (i) steam turbine and (ii) complete alternator and fixing the same on a platform brought about a new dutiable product. The Court held that the process of fixing the same on a platform and aligning them in a specified manner that turbine was nothing but a manufacturing process and a new commodity come into existence in the said process. The machine so manufactured was, however, erected on a platform, specially constructed for that purpose which made the machine immovable in character. The Court declared that while determining whether an article is permanently fastened to anything attached to the earth both the intention as well as the factum of fastening has to be ascertained from the facts and circumstances of each case. The following passage is apposite in this regard:
“There can be no doubt that if an article is an immovable property, it cannot be termed as “excisable goods” for purposes of the Act. From a combined reading of the definition of “immovable property” in Section 3 of the Transfer of Property Act, Section 3 (25) of the General Clauses Act, it is evident that in an immovable property there is neither mobility nor marketability as understood in the excise law. Whether an article is permanently fastened to anything attached to the earth requires determination of both the intention as well as the factum of fastening to anything attached to the earth. And this has to be ascertained from the facts and circumstances, of each case.” (Emphasis Supplied)
29. Applying the above test to the case at hand, the plants in question were neither attached to earth within the meaning of Section 3 (26) of the General Clauses Act nor was there any intention of permanently fastening the same to anything attached to the earth.
30. Reliance was placed by Mr. Bagaria upon the decision of this Court in Quality Steel Tubes (P) Ltd. v.CCE, U.P. – 1995 (75) E.L.T. 17 (S.C) and Mittal Engineering Works (P) Ltd. v. CCE, Meerut – 1996 (88) E.L.T. 622 (S.C.). In Quality Steel Tubes case (supra) this Court was examining whether ‘the tube mill and welding head’ erected and installed by the assessee for manufacture of tubes and pipes out of duty paid raw material was assessable to duty under residuary Tariff Item No. 68 of the Schedule being excisable goods. Answering the question in negative this Court held that tube mill and welding head erected and installed in the premises and embedded to earth ceased to be goods within the meaning of Section 3 of the Act as the same no longer remained moveable goods that could be brought to market for being bought and sold. We do not see any comparison between the erection and installation of a tube mill which involved a comprehensive process of installing slitting line, tube rolling plant, welding plant, testing equipment and galvanizing etc., referred to in the decision of this Court with the setting up of a hot mix plant as in this case. As observed by this Court in Triveni Engineering & Industries case (supra), the facts and circumstances of each case shall have to be examined for determining not only the factum of fastening/attachment to the earth but also the intention behind the same.
31. In Mittal Engineering Works case (supra), this Court was examining whether the mono vertical crystallisers erected and attached by a foundation to the earth on the site of the sugar factory could be treated as goods within the meaning of Central Excise Act, 1994. This Court on facts noted that mono vertical crystallisers are fixed on a solid RCC slab having a load bearing capacity of about 30 tonnes per sq. mt. and are assembled at site with bottom plates, tank coils, drive frames, supports, plates, distance places, cutters, cutter supports, tank ribs, distance plate angles, water tanks, coils, extension pipes, loose bend angles, coil supports, railing stands, intermediate platforms, drive frame railing and flats, oil trough, worm wheels, shafts, housing, stirrer arms and support channels, pipes, floats, heaters, ladders, platforms, etc. The Court noted that the mono vertical crystallisers have to be assembled, erected and attached to the earth on a foundation at the site of the sugar factory and are incapable of being sold to consumers in the market as it is without anything more. Relying upon the decision of this Court in Quality Steel Tubes case (supra), the erection and installation of mono vertical crystallisers was held not dutiable under the Excise Act. This Court observed that the Tribunal ought to have remembered that mono vertical crystallisers had, apart from assembly, to be erected and attached by foundation to the earth and, therefore, were not, in any event marketable as they were. This decision also, in our opinion, does not lend any support to the case of assessee in these appeals as we are not dealing with the case of a machine like mono vertical crystallisers which is permanently embedded in the structure of a sugar factory as was the position in the Mittal Engineering Works case (supra). The plants with which we are dealing are entirely over ground and are not assimilated in any structure. They are simply fixed to the foundation with the help of nuts and bolts and in order to provide stability from vibrations during the operation.
32. So also in T.T.G. Industries Ltd. v. CCE Raipur 2004 (167) E.L.T 501 (S.C.), the machinery was erected at the site by the assessee on a specially made concrete platform at a level of 25 ft. height. Considering the weight and volume of the machine and the processes involved in its erection and installation, this Court held that the same was immovable property which could not be shifted without dismantling the same.
33. It is noteworthy that in none of the cases relied upon by the assessee referred to above was there any element of installation of the machine for a given period of time as is the position in the instant case. The machines in question were by their very nature intended to be fixed permanently to the structures which were embedded in the earth. The structures were also custom made for the fixing of such machines without which the same could not become functional. The machines thus becoming a part and parcel of the structures in which they were fitted were no longer moveable goods. It was in those peculiar circumstances that the installation and erection of machines at site were held to be by this Court, to be immovable property that ceased to remain moveable or marketable as they were at the time of their purchase. Once such a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the machine becomes extinct. The same cannot thereafter be treated as moveable so as to be dutiable under the Excise Act. But cases in which there is no assimilation of the machine with the structure permanently, would stand on a different footing. In the instant case all that has been said by the assessee is that the machine is fixed by nuts and bolts to a foundation not because the intention was to permanently attach it to the earth but because a foundation was necessary to provide a wobble free operation to the machine. An attachment of this kind without the necessary intent of making the same permanent cannot, in our opinion, constitute permanent fixing, embedding or attachment in the sense that would make the machine a part and parcel of the earth permanently. In that view of the matter we see no difficulty in holding that the plants in question were not immovable property so as to be immune from the levy of excise duty’. (Emphasis is added).
39. Assessees contend before us that in the facts before us, as in the case of Solid & Correct Engineering Works(supra) there is no permanent affixation of towers and the pre-fabricated shelters to the earth, permanently. These are fixed to foundations by nuts and bolts, not with the intention to permanently attach them to the earth or for the beneficial enjoyment thereof, but only since securing these to a foundation is necessary to provide stability and wobble/vibration free operation and to ensure stability. Since affixation of towers and shelters is without the necessary intent of making these a non-temporal part and parcel of the earth to which these are temporally fixed, these continue to be movables and goods; and do not normatively, undergo transformation as immovable property, is the core contention.
40. An empirical and normative analyses of M.S. steel angles and other parts used to construct towers or shelters or affixation of towers obtained in CKD condition and pre-fabricated shelters and the process employed for their erection at a site; the degree of permanency that results from their attachment to the site by bolting them on to concrete foundations; whether the intendment in so embedding these to the site, is for permanent and beneficial enjoyment of the earth and other relevant and cognate fact specific aspects, by applying the nuanced tests of immovability expounded in Solid & Correct Engineering Works (supra), may perhaps lead to a different conclusion then the one emerging from the Hon’ble Bombay High Court’s rulings in Bharti Airtel Ltd. (supra) and Vodafone India Ltd. (supra) or the Andhra Pradesh High Court’s judgment in Bharat Sanchar Nigam Ltd.(supra).
41. In our respectful view however the challenge to the ratio and conclusions of the High Court’s decisions inBharti Airtel Ltd. (supra) and Vodafone India Ltd. (supra), on the ground that these are predicated on an incorrect and impermissible interpretation of the rationes in Solid & Concrete Engineering Works (supra), must await an appellate consideration, when and if challenged, by the Hon’ble Supreme Court. It is outside the province and jurisdiction of this Tribunal to analyse and record a ruling on a superior Court’s analyses and elucidation of other binding precedents. The A. P. High Court’s judgment in Bharat Sanchar Nigam Ltd.(supra), in the context of levy of VAT, concluded that towers are immovable property, after noticing and adverting to the judgment in Solid & Correct Engineering Works (supra). Though, the Solid & Concrete Engineering Works (supra) ruling of the Hon’ble Supreme Court was neither specifically referred to nor analysed in the Bharti Airtel Limited ruling, it was specifically considered in the later decision in VodafoneIndia Ltd. (supra). Nevertheless, the Hon’ble High Court was pleased to reiterate and affirm its earlier decision in Bharti Airtel Ltd. (supra), to conclude in conformity therewith. If the Hon’ble High Court was not persuaded to reconsider, while adjudicating the lis in Vodafone India Ltd. (supra), its earlier decision in Bharti Airtel Ltd.(supra) on a premise that its earlier decision might have been incongruous with the ratio of the Apex Court’s decision in Solid & Correct Engineering Works (supra), it is clearly beyond the province of this Tribunal to embark upon such an exercise, on any grounds, including the per-incuriam principle.
42. On the above analyses, we conclude that the Hon’ble Bombay High Court judgments in Bharti Airtel Ltd.(supra) and Vodafone India Ltd. (supra), which are directly on the issue of the character of towers and shelters and parts, and held to be immovable property, constitute the binding law, in so far as we are concerned. Since the provision of towers and shelters as infrastructure used in the rendition of an output service is common to both passive and active infrastructure providers, whether of “BAS” or “BSS” in one case and “telecom service” in the other, consequences of the application of the above Hon’ble High Court’s rulings, would not be different.
43. I, therefore, agree with the judgment of my ld. brother, the Hon’ble Member (Technical) Shri B. Ravichandran on the issues referred for resolution; and hold that our answers to the issues referred are a fortioriapplicable to the appeals tagged to be heard by this larger Bench. I also find no substance in the preliminary objections raised by Revenue regarding the constitution or composition of the larger Bench, for reasons eminently recorded in the lead judgment.
44. In the light of the above analyses and conclusions recorded in the lead opinion by Hon’ble Mr. B. Ravichandran and the concurrent opinion recorded by the Hon’ble President, the two issues on which difference of opinion had arisen vide the interim order dated 28/7/2015 and stand referred for resolution by this Larger Bench, are answered in favour of Revenue and against assessees. Regarding the 8 tagged appeals, we are of the considered view that the referred issues and conclusions recorded by us on these, in the appeals arisen pursuant to the difference of opinion recorded, will govern resolution of these issues presented in the tagged appeals, as well. Therefore the 8 tagged appeals are remitted to the appropriate Division Bench for determination on merits, i.e. ST Appeal No.55227/2013 and ST Appeal Nos.51115, 51211, 51721, 51729, 52377, 52378 and 52382 of 2015.
All the appeals are disposed of as above. No costs however.