Pre-Fabricated Shelters, Towers Essential Ingredient Of Telecommunication Service: CESTAT Allows Cenvat Credit

The Chandigarh Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that prefabricated shelters and towers are essential ingredients of telecommunication services and qualify as input services.

The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that towers and pre-fabricated shelters form an essential ingredient in the provision of telecommunication service as they are used for the purpose of supplying the service and would qualify as ‘inputs’ and, therefore, Cenvat credit can be availed.

The appellant/assessee is in the business of providing telecom network infrastructure support services to various telecommunication companies providing mobile services. The appellant has been issued an IP1 licence by the Department of Telecommunication, Ministry of Communication and Information Technology. The telecommunication infrastructure support services provided by the appellant at telecom sites are not exclusive.

The audit team noted that the appellant has wrongly availed of the Cenvat credit on prefabricated buildings (telecom shelters) and towers, tower materials, and tower structures, which fall under CETH 94060091 and 730820190, by declaring the items as capital goods. The appellant has wrongly availed Cenvat credit for services utilised in relation to prefabricated shelters and towers as input services, providing output services.

The appellant contended that tower/tower material/telecom shelters are movable goods received in CKD condition by the appellant, and therefore, the appellant is eligible to avail Cenvat credit. The goods are movable, therefore the supplier has paid excise duty, whose credit is availed of by the appellant.

The tribunal held that the order denying the cenvat credit on input and input services, capital goods on towers, tower material, shelter, etc. are not sustainable in law.

Counsel For Appellant: Gajendra Maheshwari

Counsel For Respondent: Rajeev Gupta

Case Title: Tower Vision India Private Limited Versus Commissioner of Service Tax-Delhi

Case No.: 06.09.2023

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