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Commissioner of Central Excise Service Tax v. Ultra Tech Cement Ltd

Civil Appeal · 2018 INSC 87Decided 1 Feb 2018
Civil Appeal No. 11261 of 2016
Justice A.K. Sikri · Justice Ashok Bhushan

Background

Ultra Tech Cement Ltd claimed Cenvat Credit on service tax paid for transporting its finished cement from its factory to customers' premises between January and June 2010. The Revenue issued a show-cause notice arguing this outward transportation service, used after goods left the factory, could not qualify as an "input service" eligible for credit. While the original adjudicating authority agreed with the Revenue, the Commissioner (Appeals), the CESTAT tribunal, and the Karnataka High Court all ruled in the assessee's favour, relying on a 2007 government circular.

Decision Breakdown

The Supreme Court held that the definition of "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004 had been amended in 2008, replacing the word "from" with "upto" the place of removal, meaning credit could only be claimed for transport up to, not beyond, the factory/place of removal. Since the transportation in question (factory to customer's premises) occurred after the place of removal, it fell outside the amended rule. The Court found the 2007 circular relied upon by the lower forums related only to the pre-amendment definition and could not be applied to this post-amendment period. The appeal was allowed, the High Court's judgment set aside, and the original order disallowing the credit was restored.

Lesson Learnt

Tax credit entitlements depend on the precise wording of the rule in force at the relevant time: a change as small as "from" to "upto" in a statutory definition can completely alter eligibility, and old circulars interpreting a since-amended provision cannot be relied upon after the amendment.

Official source (sci.gov.in)View Judgment (PDF)

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