Ultra Tech Cement Limited Vs Commissioner of Central Excise (CESTAT Kolkata)
CESTAT Kolkata held that CENVAT Credit cannot be denied on GTA and clearing and forwarding agency services where goods are sold on FOR basis, and also held that credit distributed through ISD cannot be denied to the recipient when no proceedings were initiated against the ISD.
M/s. Ultratech Cement Ltd., Jharsuguda Cement Works, was engaged in manufacture of cement and clinker and availed CENVAT Credit under the CENVAT Credit Rules, 2004. Its head office, central marketing office and east zonal marketing office were registered as Input Service Distributors (ISDs), through which credit relating to common input services was distributed to its units. The east zonal marketing office was also registered as a recipient of Goods Transport Agency (GTA) services and distributed the related credit through ISD.
Following EA-2000 audit of the appellant’s records, the Department issued show cause notices proposing denial of CENVAT Credit availed on the basis of ISD invoices, along with interest and equivalent penalty. The allegations included that GTA services used for transportation of finished goods from the factory to customers’ premises were beyond the place of removal and unrelated to manufacturing activity; that other services were received by offices at Kolkata rather than the appellant’s factory; and that the appellant had not disclosed input-service-wise credit in its ER-1 returns.
