The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) confirmed that ACC Limited is eligible for a 2% concessional duty rate on Ready-Mix Concrete ( RMC ), citing that the CENVAT credit in question was related to the cement manufacturing unit and not the RMC division.
ACC Limited, the appellant is a manufacturer of cement and clinker and the appellant merged with ACC Concrete Limited manufacturer of Ready-Mix Concrete or RMC in 2012. The merger was approved by the Bombay High Court, and ACC Limited took over all operations, now manufacturing both cement and RMC.
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The appellant availed a concessional excise duty rate of 2% on RMC under Notification No. 01/2011-C.E. The concessional rate required that no CENVAT credit be claimed on inputs or input services used in RMC production.
The tax authorities conducted an audit on ACC Limited. They found that ACC had taken CENVAT credits on services that were allegedly shared between both Cement and RMC divisions, potentially violating the conditions of the concessional duty. The authorities issued a Show Cause Notice in 2017, demanding Rs 104.01 crore for unpaid excise duties from 2012 to 2015, along with penalties and interest.
On appeal, the Commissioner (Appeals) confirmed the duty demand of Rs. 104.01 crore. Aggrieved, the appellant challenged the commissioner (Appeals)’s order before the CESTAT arguing that the CENVAT credits were exclusively for Cement production, not RMC.
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The appellant’s counsel explained that CENVAT credits were managed by the head office through an Input Service Distributor ( ISD ) and RMC units did not receive any of the disputed credits. The counsel admitted some early errors in the credit application but reversed them before the audit and paid the appropriate amounts to the government.
On the contrary, the department claimed that the input services especially the technical know-how from Holcim covered both Cement and RMC. They argued as per their interpretation, that using any common service credit invalidated the eligibility for concessional rates.
The two-member bench comprising Mohanty ( JudicialMember ) and M.M. Parthiban ( Technical Member ) reviewed the technical know-how agreement, ACC had with Holcim Technologies. The tribunal found that the technical services were specifically related to cement production, with no clear link to RMC, as evidenced by the agreement’s wording and ACC’s separate accounting practices for Cement and RMC.
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The tribunal noted that the appellant had reversed any incorrect credits before the official notice, aligning with legal precedents that permit such corrective actions. Therefore, the tribunal held that the appellant complied with the conditions for the concessional duty and dismissed the Department’s demand for ₹104.01 crore in additional duty, penalties, and interest.
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