2018 (10) TMI 1209 - AT - Service Tax

CENVAT Credit - input services - exempt output service - Export Cargo Handling Charges - Department alleged that they were not allowed credit on the input services used for provisions of exempted services - Held that - Despite availing the benefit of exempted services, the appropriate duty seems to have been paid by the appellant as far as the weighment income as a part of Cargo Handling Service is concerned. Perusal of the orders of the adjudicating authorities below seems to be absolutely silent qua the payment of duty / tax as shown in the ST-3 Returns - Apparently the silence is due to no such submission/argument on part of the appellant to this aspect. However, still the requisite document was very much on record. Show cause notice makes it clear that the entire demand is based on the details as were asked by the letter of February, 2016. The absence of adjudicating authorities below qua the ST-3 Returns as provided by the appellant alongwith aforesaid reply and completely ignoring the same while solely relying upon Section 66D sub clause (3) of the Finance Act seems to be an error apparent on record. The Adjudicating authority below is required to look into all the documents as that of Service Tax Returns of the impugned period and after re-assessing those documents then to adjudicate the controversy in question about alleged nonpayment - appeal allowed by way of remand.

Summary

Issues:
Appeal against Commissioner (Appeals) order regarding Service Tax on Export Cargo Handling Charges and Cenvat Credit Rules, 2004 applicability.

Analysis:
The appellant, engaged in various services, was alleged to not pay Service Tax on Export Cargo Handling Charges while availing credit for other services. A show cause notice was issued, demanding payment for exempted services under Cenvat Credit Rules, 2004. The initial demand was confirmed, leading to an appeal before the Commissioner (Appeals), who dismissed it. The appellant argued that the demand was based on a misconception and requested a remand for fresh adjudication.

The Department justified the demands, citing Rule 6(3) of CCR, 2004 and tax liability on weighment charges. The Commissioner's order was supported, stating the appellant's liability under Section 66D sub clause (3) of the Finance Act. The Department opposed a remand, asserting the correctness of the confirmed demand.

Upon review, it was found that the appellant had provided details and paid duty on weighment income as part of Cargo Handling Services, which was not adequately addressed in the adjudication. The show cause notice was solely based on a letter requesting information, overlooking the appellant's compliance with tax liabilities as shown in ST-3 Returns. The absence of consideration of these documents and reliance solely on a specific section of the Finance Act was deemed an error, warranting a remand for reassessment.

The appellate authority directed the lower adjudicating authority to re-examine all relevant documents, including Service Tax Returns, to properly assess the alleged nonpayment issue. The appeal was allowed for remand, emphasizing a fresh examination of the case without deciding on limitation and suppression of facts, leaving it open for the adjudicating authorities to address in the new decision-making process.