The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the concessional rate of central excise duty can be availed on technical know-how fees taken for ‘ready mix concrete’ (RMC).
The bench of S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) has observed that the amount of CENVAT credit on account of other common input services and interest already paid, as they relate to reversal of CENVAT credit of other common input credit attributable to RMC units, the payments having been credited to the Government account are incorrectly appropriated to the adjudged demands by the impugned order for demand of differential Central Excise duty on RMC.
Table of Contents
Background
The appellants/assessee is in the business of manufacturing of Cement, Clinker and Ready-Mix Concrete (RMC). The appellants had multiple factories manufacturing only RMC in the name and style of ACC Concrete Limited and apart from that, also had various factories across India for the manufacture of Cement and Clinker, in the name and style of ACC Limited.
The appellants were registered with Large Taxpayer Unit (LTU) having membership. The Mumbai office of appellants was a registered/corporate office and the office had obtained Service Tax registration as input service distributor (ISD) for distribution of credit among various units of ACC Ltd. holding Central Excise/Service Tax Registration and engaged in manufacture of excisable goods namely Cement and Clinker falling under Central Excise Tariff Item (CETI) 25232930 & 25231000 of the Central Excise Tariff Act, 1985 (CETA).
The Audit wing of the department had observed that the appellants-assessee had availed entire credit of input services pertaining to both cement division & RMC division and distributed entire credit to their cement manufacturing units of Cement division.
Since the appellants were availing concessional rate of duty under Notification No.01/2011-C.E.dated 01.03.2011,as amended, it was interpreted by the department that they were not entitled for the benefit of concessional rate as they had availed Cenvat credit on input services as stated above.
Consequently, the department contended that the appellants were liable to discharge full rate of 6% of Central Excise duty advalorem for RMC manufactured and cleared by them w.e.f. 17.03.2012.
The Commissioner had confirmed all the proposals made in the show cause proceedings, besides imposing a penalty equivalent to the duty, on the basis of the findings recorded in the order.
Arguments
The appellant contended that the appellants were availing the benefit of concessional rate of Central Excise Duty, on the RMC cleared by the appellants for home consumption. The adjudicating authority had disallowed the benefit of concessional rate of Central Excise Duty vide above referred notification, on the ground that in respect of RMC cleared by the appellants during 2012 to 2015, they had availed CENVAT credit in contravention of proviso to the said Notification No.1/2011-C.E. dated 01.03.2011, as the appellant’s head office being a Input Service Distributor (ISD) took CENVAT Credit of common input services provided by Holcim Technologies Limited, Switzerland.
The appellant contended that no part of the disputed CENVAT Credit was distributed to RMC factories, there is no CENVAT Credit taken by RMC factories in contravention of the proviso to the said Notification No. 01/2011-C.E. The denial of exemption on the purported findings that the appellants took CENVAT credit of disputed common input services is ex-facie erroneous and untenable in law.
The appellant stated that the purported findings in the impugned Order and submissions of the learned Special Counsel proceeded on an assumption that taking of CENVAT Credit by ISD means that the CENVAT Credit is taken by the RMC factories. This he claimed is patently erroneous.
The department contended that the Commissioner had examined the agreement entered by the appellants for obtaining the Technical know-how from the foreign entity, and stated that since such IPR services cover ‘cementitious materials’, such services is intended to cover both cement products and RMC and therefore the service tax paid on such common input services, used in the manufacture of RMC, makes the appellants ineligible for the concessional rate of excise duty payable on the RMC. Therefore, he prayed that the impugned order is sustainable and the appeal preferred by the appellants are liable to be set aside.
Issue Raised
The issue raised was whether the technical know-how services, obtained from the foreign entity has been used by the appellants for use in the manufacture of final products viz., cement, clinker, etc. as well as the manufacture of Ready-Mix Concrete (RMC).
Conclusion – Concessional Rate Of Central Excise Duty
The tribunal set aside appropriation by the order, while allowing the payment already made in the CENVAT account to be retained by the department in the Government account as proper discharge of duty on reversal of CENVAT credit. Hence, no relief of such payment is given to the appellants for such amounts already paid by them.
Case Details
Case Title: ACC Limited v/s Principal Commissioner of Central GST & Central Excise
Case No.: EXCISE APPEAL No. 85127 of 2019
Date: 21.10.2024
Counsel For Appellant: Prakash Shah
Counsel For Respondent: Ajay Jain
