UltraTech Entitled to Full CENVAT Credit on Fly Ash O&M Services: CESTAT Rules Dept Cannot Restrict Credit

The CESTAT (Chennai Bench) ruled that UltraTech Cement Ltd is entitled to full CENVAT credit on service-tax paid for its subcontractor’s operation and maintenance (O&M) services for a fly-ash collection system. The department had argued for restricting the credit proportionately based on the fly ash allocation to other entities. However, the tribunal rejected that, noting that UltraTech received the full service, paid for it, and that the service was integrally used in its cement production. The tribunal emphasized that credit cannot be disallowed simply because part of the fly ash is allocated elsewhere if the service was entirely utilized by the appellant. The decision strengthens tax-credit rights for input services in industrial operations, and reaffirms that tax rules must focus on usage, not merely on theoretical or proportional attribution.