P. Anjani Kumar ORDER
P. Anjani Kumar, Member (T)
1. The appellants, M/s. Bharti Airtel Ltd., are providers of taxable service under the category of Telephone/Telecommunications Services; an audit conducted by the Department for the period 10.09.2004 to 30.09.2006, it appeared that the appellants have availed CENVAT credit on (i) Angles, Channels, Beams, MS Tower parts (SS Mats) etc. used in erection and installation of towers and on (ii) Pre-fabricated buildings/shelters/PUF panels used for housing/storage of generating sets and other components/equipments/spares etc. and the same was not available in terms of CENVAT Credit Rules; CBEC vide Circular F. No. 137/315/2007-CX4 dated 07.12.2007 held that the activity of erection of towers does amount to manufacture and hence credit is not available. A SCN dated 6.07.2009 seeking to deny the erroneous credit amounting to Rs. 7,89,56,288/- and to impose penalty under Section 78 of the Finance Act and Rule 15(1) of the CCR, 2004. The same was confirmed by Order-in-Original No. 03/2010 (ST) dated 17.02.2010 which is subject of discussion in the appeal.
2. The Learned Counsel for the appellants submits that the towers and prefabricated buildings on which CENVAT credit has been availed are capital goods and therefore, CENVAT credit is correctly availed as:
• The towers/tower materials and pre-fabricated shelters which are integral to the erection of the cell sites for providing cellular coverage in public areas are capital goods used in providing the output service for the Appellants.
• A cell site of a cellular operator consists of antennae which receive and transmit signals so as to facilitate the Telecommunication service of the Appellants. These antennae are mounted on the tower and a typical tower would have more than four or five antennae to receive the signal and transmit the signal.
• Therefore, tower/tower materials and pre-fabricated shelters would fall under "Components, Spares and Accessories" of capital goods since they act as components and accessories to the antennae at the cell site.
2.1. The appellants are entitled to avail CENVAT credit of towers/tower materials and pre-fabricated shelters as inputs as:
• The term "all goods" mentioned in Rule 2(k)(ii) of Cenvat Credit Rules, 2004 would cover all the goods used for providing any output service except those which are specifically excluded in the said Rule. Thus, even the capital assets which are used for providing any output service will be covered under the term "all goods" mentioned in 2(k)(ii).
• The antennas which are essential for the provision of telecommunication service have to be installed at the top of the towers for transmitting mobile signals into atmosphere.
• The pre-fabricated shelters and panels are used for installation of transmission devices, DG sets and other electrical and electronic instruments. It serves as a junction box. No output service could be provided without the pre-fabricated shelters.
2.2. Learned Counsel for the appellants submits that towers are in the nature of movable property as:
• It is submitted that angles, channels and other parts used to construct towers or shelters or affixation of towers are obtained in Completely Knocked Down (CKD) condition.
• At the site, t........