2016 (2) TMI 19 - HC - Central Excise

Utilized CENVAT Credit exceeding 20% of the amount of service tax payable on taxable output service - Tribunal directing the respondent to make payment of ₹ 3,71,501/- for the normal period along with the interest for a month s period against the total demand of ₹ 2,15,14,945/- - Held that - Tribunal without following the statutory provisions contemplated under the Act, proceeded to direct the assessee to make the payment of ₹ 3,71,501/- towards the amount due for the normal period with interest of ₹ 4025/- for a month and closed the matter as said to have been suggested. The Tribunal proceeded to pass the order based on sentiments which is uncalled for, particularly, while adjudicating the revenue matters. In the given circumstances, we are of the opinion that it would be appropriate to remand the matter back to the Original Authority to consider the matter afresh after providing an opportunity of being heard to the parties.

Issues:
1. Challenge to order passed by Customs, Excise & Service Tax Appellate Tribunal.
2. Incorrect utilization of service tax credit by the respondent.
3. Show cause notice issued by Commissioner of Central Excise and Service Tax.
4. Appeal by respondent before CESTAT.
5. Questions of law raised by the revenue.
6. Interpretation of statutory provisions by CESTAT.
7. Arguments presented by both parties.
8. Tribunal's decision-making process.
9. Remand of the matter to the Original Authority.

Analysis:

1. The appeal was filed by the revenue challenging the order of the Customs, Excise & Service Tax Appellate Tribunal, which observed that the respondent, a banking company, had incorrectly utilized service tax credit on various services. The respondent had utilized credits in excess of permissible limits and failed to pay amounts towards credit taken on exempted services. The Commissioner issued a show cause notice proposing a demand, which was later reduced in the order in original.

2. The respondent appealed before CESTAT, which partially allowed the appeal, directing the assessee to make a payment and interest. The revenue raised substantial questions of law regarding the utilization of CENVAT Credit, calculation of the 20% limit, payment of duty, and the period for which demand could be made. The revenue contended that the respondent exceeded the credit limit and should pay the determined amount as per the Rules.

3. The revenue argued that the Tribunal did not consider the statutory provisions properly and made a decision based on sentiments, directing the payment for the normal period. The revenue sought to set aside the Tribunal's order and confirm the original order or remand the matter for further examination regarding credit utilization and other issues raised in the appeal.

4. The respondent's counsel supported the Tribunal's order but agreed to a remand for fresh consideration by the Original Authority, leaving all contentions open. The High Court noted that the Tribunal's decision was not in line with statutory provisions and directed a remand to the Original Authority for a fresh review after providing an opportunity for both parties to be heard.

5. The High Court disposed of the appeal without addressing the questions of law raised, remitting the matter back to the Original Authority for reconsideration. The court emphasized the need for adherence to statutory provisions in revenue matters and ordered the Original Authority to expedite the process after hearing both parties.

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