2015 (6) TMI 820 - AT - Central Excise

Denial of CENVAT Credit - contravention of Rule 2(l) of Cenvat Credit Rules - Inputs used in manufacturing activity - Held that - Show-cause notice is vague as it nowhere gives the breakup of the proposed demand nor it discusses any particular reasons as to why the CENVAT Credit is not allowable in respect of the three services. The break up of each is nowhere given. Thus, I find that of the whole proceeding is vitiated for want of a valid show-cause notice. The service of a valid show-cause notice, containing the, exact case and/or gist of the allegation, the appellant has to meet, is a sin qua non for the adjudicating authority to assume jurisdiction for adjudication. Thus, in the facts and circumstances, I hold that the whole proceedings is vitiated for want of a valid show-cause notice, and I set aside the impugned order - Decided in favour of assessee.

Summary

Issues:
1. Admissibility of CENVAT Credit on various services.
2. Allegation of suppression of facts and extended period for demand.
3. Adjudication of proposed demand by the Commissioner (Appeals).
4. Delay in filing appeal and condonation of delay.
5. Validity of show-cause notice and jurisdiction of adjudicating authority.

Analysis:

Issue 1: Admissibility of CENVAT Credit on various services
The appellant, a manufacturer, availed CENVAT Credit on services like Outward Courier charges, Telephone Bills, and Cargo Handling Charges. The Revenue alleged inadmissibility of the credit under Rule 2(l) of Cenvat Credit Rules, 2004. The appellant contended that these services were directly related to business activities and justified the credit. The Commissioner (Appeals) allowed credit for Telephone and Cargo Handling Services but rejected it for Courier charges, equating it to outward transportation.

Issue 2: Allegation of suppression of facts and extended period for demand
The Revenue issued a show-cause notice proposing to disallow CENVAT Credit along with interest and penalty under Rule 15(2) of Cenvat Credit Rules. It alleged suppression of facts due to the appellant's self-assessment procedure. The appellant argued that there was no suppression as they regularly paid Service Tax and filed returns, making the facts known to the Revenue.

Issue 3: Adjudication of proposed demand by the Commissioner (Appeals)
The Commissioner (Appeals) confirmed the demand partially, allowing credit for some services and rejecting it for others. The appellant appealed to the Tribunal against the rejection of credit for Courier charges.

Issue 4: Delay in filing appeal and condonation of delay
The appellant faced a delay in filing the appeal due to confusion regarding additional services proposed for disallowance. The Tribunal allowed the condonation of delay, finding no defaults on the appellant's part.

Issue 5: Validity of show-cause notice and jurisdiction of adjudicating authority
The Tribunal found the show-cause notice vague, lacking a specific breakup of the proposed demand for each service. It held that a valid notice is essential for the adjudicating authority to assume jurisdiction. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant due to the procedural flaw.

This detailed analysis highlights the key legal aspects and arguments presented in the judgment, addressing each issue comprehensively and maintaining the legal terminology used in the original text.