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2020 (1) TMI 323 - AT - Central ExciseCENVAT Credit - scope of SCN - input services - airfreight - Commissioner(Appeals) decided the issue after 12 years - HELD THAT - The appellant which is a PSU have availed CENVAT credit on outward freight which falls under the definition of input service prior to the amendment in the definition of input service effected from 01/04/2008. Further the appeal before the Commissioner(Appeals) was filed in 2007 and the Commissioner(Appeals) after 12 years has given the personal hearing and decided the appeal and has denied the CENVAT credit on air freight and remanded the matter for quantification of the amount relating to airfreight. In view of the decision of the Hon ble Madras High Court in the case of M/S. J.M. BAXI CO. VERSUS THE GOVERNMENT OF INDIA 2016 (6) TMI 813 - MADRAS HIGH COURT and the Apex Court decision in the case of GOVERNMENT OF INDIA VERSUS CITEDAL FINE PHARMACEUTICALS 1989 (7) TMI 100 - SUPREME COURT the adjudication by the Commissioner(Appeals) is bad in law as the Commissioner(Appeals) has not given any finding for taking the decision after 12 years and the same has caused prejudice. Scope of SCN - HELD THAT - It is found that the Commissioner(Appeals) has gone beyond the show-cause notice. The show-cause notice was issued alleging that outward freight is not included in the input service whereas in the impugned order the Commissioner(Appeals) has held that the place of removal cannot be beyond the port/ICD/CFS. In fact this is beyond the show-cause notice. Credit allowed - appeal allowed - decided in favor of appellant.
Issues:
1. Validity of CENVAT credit availed on outward freight and airfreight. 2. Delay in adjudication process and its impact on the appellant's rights. 3. Compliance with principles of natural justice in the appellate proceedings. 4. Interpretation of the definition of input service in relation to outward transportation. 5. Consistency of the appellate decision with the show-cause notice. Detailed Analysis: 1. The case involved a challenge to an order passed by the Commissioner(Appeals) regarding the demand of CENVAT credit availed on outward freight and airfreight. The original authority confirmed the demand, leading to an appeal by the appellant. The appellant contended that the impugned order was unsustainable in law and the appellate authority had not properly appreciated the facts and the law. The appellant highlighted that the show-cause notice did not provide a clear bifurcation between outward transportation and air freight, raising concerns about the order's alignment with the notice's scope. 2. The appellant raised concerns about the delay in the adjudication process, arguing that a 12-year gap between the show-cause notice and the appellate decision caused prejudice as relevant documents were difficult to secure. The appellant cited legal precedents emphasizing the need for adjudication within a reasonable time frame to ensure procedural fairness. The delay was considered a violation of natural justice principles and impacted the appellant's ability to present a robust defense. 3. The appellant's counsel argued that the appellate proceedings lacked adherence to natural justice principles and were unsustainable in law. The appellant pointed out that the appellate authority's decision was issued after a significant delay without providing adequate reasons for the prolonged process. This lack of reasoning and the deviation from established legal principles raised concerns about the fairness and legality of the appellate proceedings. 4. The interpretation of the definition of input service in relation to outward transportation was a crucial aspect of the case. The appellant asserted that outbound transportation up to the place of removal constituted an input service eligible for CENVAT credit. Legal precedents and relevant decisions were cited to support the appellant's position that outbound transportation, including air freight, fell within the ambit of input services before a specific regulatory amendment. 5. The appellant challenged the consistency of the appellate decision with the show-cause notice, highlighting discrepancies between the allegations in the notice and the findings in the order. The appellant argued that the appellate authority exceeded the scope of the notice by introducing new grounds for disallowing CENVAT credit on air freight. This departure from the issues raised in the notice raised concerns about procedural fairness and the legality of the decision. In conclusion, the Appellate Tribunal set aside the impugned order, allowing the appeal of the appellant. The decision was based on the unsustainable nature of the order in law, the failure to adhere to natural justice principles, the misinterpretation of the definition of input service, and the inconsistency between the appellate decision and the show-cause notice. The judgment emphasized the importance of procedural fairness, timely adjudication, and alignment with legal principles in tax matters.
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