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17 Sep 2014

CENVAT Credit on Towers

In the recently concluded case of Bharti Airtel Limited vs.The Commissioner of Central Excise, Bombay High Court 2014 (9) TMI 38, Hon’ble High Court of Bombay held that CENVAT Credit on tower cannot be made available under clause (i) or clause (ii) of Rule 2(a)(A) of CENVAT Credit Rules,2004 as to be Capital Goods or under sub Clause (i) of Rule 2(k) as to be Input.

In the instant case, CENVAT credit was availed by Bharti Airtel Limited in accordance with Rule 2(a)(A) of CENVAT Credit rules on the contention that towers and parts thereof are “Supporting Structure” for antenna which are Capital goods and therefore , as antenna is qualified as ‘Capital goods’ , the towers and parts thereof would also qualify as Capital good.

The Hon’ble High Court held that the Tower and Parts thereof would fall under the chapter heading 7308 of the Central Excise Tariff Act and the same is not specified under Rule 2(a)(A) of CENVAT Credit Rules,2004, which makes it ineligible for claiming CENVAT Credit . Further, tower and parts thereof are fastened and are fixed to the earth and after their erection become Immovable and thereof cannot be goods. Hence the appellant cannot claim the CENVAT Credit of Duty paid on these items, not being goods.