Ambuja Cements Ltd. Vs Commissioner of Customs (CESTAT Mumbai)
Summary: The appeal was directed against the order dated 18.11.2019 passed by the Commissioner of Customs, Central Excise and Service Tax (Appeals), Nagpur, upholding the Order-in-Original and disallowing CENVAT credit of Rs. 6,90,071/-, along with interest and penalties. The dispute concerned whether the appellant’s investment in mutual funds constituted “trading of securities” and consequently an exempted service requiring reversal of CENVAT credit under Rule 6 of the CENVAT Credit Rules, 2004.
The appellant was engaged in manufacture of Cement and Clinker and availed CENVAT credit on inputs, capital goods and various input services. Its corporate office was registered as a Large Taxpayer Unit and also held an Input Service Tax Distribution registration for distributing credit to 17 manufacturing units. During audit of annual reports and cash-flow statements for 2011, 2012, 2013 and 2014, the Department noticed purchase and sale of current investments, including mutual funds and equity shares. The Department treated this activity as “trading of Securities”, reasoning that securities were goods and that trading of goods was covered by the negative list under Section 66D of the Finance Act, 1994.
The Department further alleged that common input services such as Banking & Other Financial Services, Advertisement, Computer Networking, Auditing, Legal and Technical Consultancy, Share Registry, Courier, Insurance, Business Auxiliary Service and Renting of Immovable Property Service had been distributed to manufacturing units engaged in dutiable as well as exempted activities. According to the Department, the appellant had not maintained separate accounts under Rule 6(2) and had not exercised the option contemplated under Rule 6(3A). A show-cause notice dated 25.11.2016 demanded Rs. 91,21,237/- for the period 2011 to 2014, while a subsequent Statement-cum-Notice dated 30.10.2018 proposed disallowance of Rs. 6,90,071/- for January 2017 to June 2017, besides interest and penalty.
