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2017 (12) TMI 1314 - AT - Service TaxCENVAT credit - distribution of credit - place of removal - scope of SCN - Held that - Since, the Commissioner (Appeal) has addressed the basic issue raised in the SCN, he should have concluded his findings only to that extent as alleged in the SCN. Since he has decided the issues, which were not the part of allegation in the SCN, it is evident that he has travelled beyond the scope of the SCN, which will not stand for judicial scrutiny - appeal allowed - decided in favor of appellant.
Issues: Allegation of inadmissible input service credit distribution to manufacturing units based on the location of the depot.
The judgment revolves around the appellant's operation of a depot in Jaipur distributing credit of Service Tax paid on input services to its manufacturing units in Chakan and Ranjangaon, Pune. The Department alleged that the appellant distributed inadmissible credit for services obtained beyond the place of removal, contending the depot cannot be considered a place of removal. The initial order confirmed a demand, interest, and penalty. The Ld. Commissioner (Appeals) in the impugned order denied credit on clearing forwarding agents service. The appellant argued that the depot should be considered a place of removal, making the Service Tax paid on services utilized there eligible for Cenvat benefit. The Ld. Consultant criticized the Commissioner (Appeals) for exceeding the scope of the show cause notice by addressing issues not part of the initial allegation. The Tribunal noted that the show cause notice focused on the depot not being a place of removal and the ineligibility of Service Tax credit on services used there for distribution to manufacturing units. However, the Commissioner (Appeals) ruled in favor of the appellant, considering the depot as a place of removal. The Tribunal held that the Commissioner (Appeals) exceeded the show cause notice's scope by addressing issues beyond the initial allegation. As the Commissioner should have limited findings to the show cause notice's allegations, the Tribunal found no merit in the impugned order and allowed the appeal in favor of the appellant, setting aside the impugned order.
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