2008 (2) TMI 59 - AT - Service Tax

Cenvat credit on the input service (security agency) utilized by the appellants for residential colony which is adjacent to the factory - order of adjudicating authority of demand, penalty & interest uphold by comm.(A) - without expressing any opinion on the merits of the case, the Impugned order being non-speaking as it has not dealt with grounds of appeal raised by the appellants, is unsustainable and liable to be set aside - matter is remanded for de novo adjudication

Summary

Issues:
1. Availment of Cenvat credit on security services for a residential colony adjacent to the factory.

Analysis:
The appeal was directed against the Order-in-Appeal upholding the demand of duty, penalty, and interest imposed on the appellants for availing Cenvat credit on security services for a residential colony adjacent to the factory. The Revenue contended that such security services did not qualify as input services directly or indirectly used in the manufacture of final products. The adjudicating authority and the Commissioner (Appeals) upheld the charges, leading to the appeal before the Tribunal.

The appellant argued that the first appellate authority did not provide any findings on merits and merely reiterated the adjudicating authority's decision without addressing the grounds of appeal. Citing a Supreme Court judgment, the appellant emphasized the importance of reasons in a judgment to ensure clarity and application of mind. On the other hand, the SDR argued that the Order-in-Original contained detailed reasoning, and the appellate authority had considered the adjudicating authority's findings.

Upon review, the Tribunal found that the Commissioner (Appeals) had not addressed the grounds raised by the appellant in their defense. Referring to the Supreme Court judgment on the necessity of reasons in a decision, the Tribunal concluded that the impugned order was non-speaking and unsustainable. Therefore, the Tribunal set aside the order and remanded the matter for de novo adjudication proceedings to the Commissioner (Appeals), emphasizing the need for a personal hearing and consideration of all grounds of appeal.

In the final analysis, the Tribunal allowed the appeal by way of remand, highlighting the importance of providing reasons in a judgment and ensuring that all grounds of appeal are addressed for a fair and just decision-making process.