India Cements Limited Vs Commissioner of Central Tax (CESTAT Hyderabad)
The case involves three appeals filed by different units of the same company engaged in the manufacture of cement and clinker, concerning denial of CENVAT credit distributed through Input Service Distributor (ISD) challans. The dispute relates to the period from August 2012 to March 2017. During audit conducted in December 2013, the department observed that service tax credit distributed by the corporate and regional offices was allocated in three ways: plant-specific, turnover-based, and quantity-based. The department objected to the credit distributed on a “quantity basis,” alleging violation of amended Rule 7 of the CENVAT Credit Rules, 2004, and issued show cause notices proposing recovery of the alleged irregular credit. The demands were confirmed through adjudication orders, leading to the present appeals.
The appellants argued that the show cause notices invoking the extended period of limitation were invalid, as all details of credit availment were regularly disclosed in ER-1 returns and made available during audit. It was submitted that there was no suppression of facts or intent to evade duty. The appellants further contended that there was no dispute regarding eligibility of input services or total credit distribution, and the issue was limited to the method of distribution under Rule 7. They also argued that the entire exercise was revenue neutral and therefore no mala fide intention could be attributed.
