2011 (7) TMI 478 - AT - Service Tax

Cenvat credit - export of goods - manufacture of motor vehicles parts - The assessees replied to the notice stating that they had availed credit of service tax paid on clearing and forwarding services, fumigation services, courier services and goods transport agency services - The plea of the assessees that they had availed of two out of the services set out in the show-cause notice namely, clearing and forwarding services and fumigation services along with two other services and did not avail of port services has not been considered by the authorities below - therefore, set aside the impugned order and remit the case for fresh decision to consider the contentions of the assessees to the adjudicating authority.

Summary

Issues: Denial of credit of service tax on various services used in export, failure to consider assessees' contentions, imposition of penalty for irregular CENVAT credit availed.

In this case, a show-cause notice was issued to the assessees engaged in manufacturing motor vehicle parts, proposing denial of credit of service tax paid on clearing and forwarding services, port services, and fumigation services used in exporting goods. The assessees contended that they had availed credit of service tax on four services, including clearing and forwarding services, fumigation services, courier services, and goods transport agency services. However, the adjudicating authority did not consider their stand and confirmed the demand, along with interest and a penalty for irregular CENVAT credit availed. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal.

During the hearing, the assessees' plea that they had only availed of clearing and forwarding services and fumigation services, not port services as mentioned in the show-cause notice, was not considered by the authorities. The Tribunal acknowledged this oversight and set aside the order, remitting the case for a fresh decision to properly evaluate the assessees' contentions. The Tribunal directed the adjudicating authority to pass fresh orders after providing a reasonable opportunity for the assessees to present their defense.

Ultimately, the Tribunal allowed the appeal by way of remand, emphasizing the importance of considering all relevant contentions and providing a fair opportunity for the assessees to be heard. The decision highlights the need for a thorough examination of the facts and proper consideration of the assessees' arguments before reaching a final determination on the denial of service tax credit and imposition of penalties for irregular credit availed.