2018 (5) TMI 1963 - AT - Service Tax

CENVAT credit - trading activity/exempt services - non-maintenance of separate accounts in respect of the exempted and taxable services - Rule 6(3) of the CENVAT Credit Rules - HELD THAT - Para 13 of the order-in-appeal referred to Rule 6 (3A)(e) of the CENVAT Credit Rules to charge interest and modifies para 29(iii) of the order-in-original accordingly. Accordingly it is found from the order-in-original that Rule 6(3A)(e) was not referred to in it and it does not appear that appellant was issued a notice invoking this rule. The appellant should be given an opportunity to defend himself against the provisions of this rule and the interest applicable there-under. Matter remanded back to the Commissioner (Appeals) for denovo adjudication after following the principles of natural justice - appeal allowed by way of remand.

Summary

Issues:
1. Failure of the appellant to appear for multiple hearings.
2. Non-maintenance of separate accounts for exempted and taxable services.
3. Dispute regarding the invocation of Rule 6(3A)(e) without prior mention in the show-cause notice.

Analysis:
1. The appellant, engaged in manufacturing electric panel boards, providing services, and trading, failed to appear for the fourth hearing despite prior opportunities. The Tribunal decided to proceed with the case on merits due to the appellant's absence.

2. The appellant did not maintain separate accounts for exempted and taxable services as required by Rule 6(3) of the CENVAT Credit Rules. Upon realization, they reversed an amount but were issued a show-cause notice resulting in a demand for CENVAT credit, interest recovery, and a penalty by the lower authority. The Commissioner (Appeals) partly modified the order, leading to a contention by the appellant regarding the invocation of Rule 6(3A)(e) without prior mention in the show-cause notice.

3. The Tribunal observed discrepancies in the order-in-appeal invoking Rule 6(3A)(e) for charging interest, which was not mentioned in the original notice to the appellant. As a result, the matter was remanded back to the Commissioner (Appeals) for fresh adjudication, emphasizing the need to adhere to principles of natural justice and provide the appellant with an opportunity to defend against the provisions of the rule and the applicable interest.

This judgment highlights the importance of procedural fairness, adherence to statutory rules, and the right of the appellant to be heard and defend against all charges brought against them.