2013 (11) TMI 651 - HC - Service Tax

Cenvat credit Whether the Authority has travelled beyond the scope of show cause notice - Maintenance and repair service under Rule 6 (5) of Cenvat credit Rules Tribunal has decided in favor of assessee and allowed the credit - Held that - There was no question of law appears to consider the amount involved is also not such to entertain the appeal Decided Against Appellant.

Summary

Issues:
1. Interpretation of CENVAT Credit under Central Excise Act, 1944
2. Disallowance of CENVAT Credit for maintenance and repair service
3. Eligibility for CENVAT Credit on renting of immovable property service
4. Appeal against the imposition of penalties for ineligible credit of service tax

Analysis:
1. The case involved a Central Excise Appeal under Section 35-G of the Central Excise Act, 1944, stemming from a final order by the Customs, Excise & Service Tax Appellate Tribunal. The Tribunal restricted the CENVAT Credit to Rs.17,982 and did not find grounds for imposing a penalty exceeding that amount. It was noted that after an amendment in Section 78, penalties cannot be imposed concurrently under Sections 76 and 78. The Order-in-Appeal was upheld, confirming the service tax amount and the penalty under Section 78.

2. A show cause notice was issued to the respondent, proposing the admissibility of CENVAT Credit amounting to Rs.17,982 only, with the remainder disallowed. The CESTAT observed that the authority exceeded the show cause notice's scope by disallowing the entire CENVAT credit related to maintenance and repair services, specified under Rule 6(5) of CENVAT Credit Rules.

3. The Tribunal determined that the appellants provided renting of immovable property service and maintenance and repair service beyond 998 sq. ft. Such services not utilized for output services were deemed ineligible for CENVAT credit. However, the appellants were deemed eligible for CENVAT credit concerning service tax paid on maintenance service for 998 sq. ft of the total area, aligning with the original show cause notice.

4. The department appealed on the substantial question of law regarding the denial of total demand of Service Tax, interest, and penalties due to the respondents' availing of ineligible service tax credit. The Court, however, concluded that the stated question of law did not warrant consideration, given the amount involved and the absence of any legal issue necessitating review. Consequently, the Central Excise Appeal was dismissed.