Property must be qualified as “Immovable Property” for the purpose of availing Input Tax Credit

Case Details:

Issue- In the above case, the common question of law is whether parts of base transmission systems (hereafter “BTS”) are classifiable under Tariff Heading 8517 and, consequently, all components, spares and accessories qualify as capital goods in terms of Rule 2(a)(A)(iii), of the CENVAT Credit Rules, 2004 (hereafter “the Credit Rules”) regardless of whether those components, spares and accessories only fall under Chapter 85 and whether towers, shelter and accessories used by the Appellants for providing telecom services are immovable property and whether petitioner is entitled  to claim CENVAT credit on the towers, shelter as ‘accessories’ either as capital goods or input goods in terms of Rule 2(a) or 2(k) of the Credit Rules?

Held- It was held that permanency test has to be applied, in the context of various objective factors and cannot be confined or pigeonholed to one single test. In the present case, the entire tower and shelter is fabricated in the factories of the respective manufacturer and these are supplied in CKD condition. They are merely fastened to the civil foundation to make it wobble free and ensure stability. They can be unbolted and reassembled without any damage in a new location and as per the detailed affidavit filed by the assessees demonstrate that installation or assembly of towers and shelters is based on a rudimentary “screwdriver” technology. They can be bolted and unbolted, assembled and re-assembled, located and re-located without any damage and the fastening to the earth is only to provide stability and make them wobble and vibration free; devoid of intent to annex it to the earth permanently for the beneficial enjoyment of the land of the owner. The assessees have also placed on record the copies of the leave and license agreements, making it clear that the licensee has the right to add or remove the aforesaid appliances, apparatus, equipment etc. therefore, a  machine or apparatus annexed to the earth without its assimilation by fixing with nuts and bolts on a foundation to provide for stability and wobble free operation cannot be said to be one permanently attached to the earth and therefore, would not constitute an immovable property. Thus, not eligible for input tax credit.