Order in Original cannot travel beyond the allegations of SCN.

PJ/Case law/2013-14/1933

Case:- M/S TREAT CONVENIENCE FOODS V/S THE COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, KANPUR

Citation:- 2013-TIOL-1755-CESTAT-DEL

Brief Facts:- The assessee filed the present appeal against the Order in Original No.235-ST/APPL/KNP/2012 dated 08.08.2012. During the course of audit of the appellants it was noticed that appellants have received amount of Rs. 10,73,088/- during the period April 2009 to March 2010 on account of renting out of immovable property to M/s Domino's Pizza Ltd and the service tax was paid by them in March 2010 amounting to Rs. 22,315/-. Appellant have also availed and utilized the Cenvat Credit of service tax paid on Common Maintenances Service of property as input service during the period July' 2009 to March' 2010 amounting to Rs. 88,214/-. On perusal of agreement it was observed that they have taken 5152 Sq. ft. on lease from M/s Gopi Apartment and portion of the same measuring 998 Sq. ft. has been given on lease to M/s Domino's Pizza India Ltd. It was view of the Department that amount of credit should be restricted to the area let out i.e. 998 Sq. ft. as input service has been used in providing output service to the extent of area given on lease to M/s Domino's Pizza India Ltd. and according to Department the admissible credit is Rs. 17,982/- only. The balance amount of Cenvat Credit was disallowed by Deputy Commissioner who also imposed the penalty under Section 76 and 78 of Finance Act. The appellant filed the appeal before the Commissioner (Appeal), who upheld the Order in Original and rejected their appeal. Aggrieved by the order, the appellant filed the present appeal.

Appellant’s Contention: -The appellant contended that under Rule 6(5) of the Cenvat Credit Rules the entire amount of Cenvat Credit is admissible to them in respect of Maintenance and Repair service as this service is specified under Rule 6(5) of the Cenvat Credit Rules.

Reasoning of Judgment: - The Hon’ble Tribunal held that from the Show Cause Notice it was found that it was the proposal in the Show Cause Notice that Cenvat Credit amounting to Rs. 17,982/- only is admissible to the appellants and the balance of Cenvat Credit was proposed to be the disallowed to them. They find both the lower authorities have travelled beyond the Show Cause Notice in the disallowing of entire Cenvat Credit. They find that the inputs service is defined as any service used by provider of the taxable service for providing output service. In the present case the appellants are provider of renting of immovable property service and maintenance and repair service in respect of area other than 998 Sq. ft. will not be covered under definition of inputs service as that has not been used in providing the output services. Therefore the appellant are eligible for the Cenvat Credit in respect of service tax paid on Maintenance service in respect of 998 Sq. ft. of the total area. They find that this was the proposal in the original Show Cause Notice. Therefore, they hold that appellants are eligible for the Cenvat Credit amounting to Rs. 17,982/- and the rest of the amount is not admissible to them. However, they find that penalty has been imposed on the appellants under Section 76 and 78. They find in view of the fact that original proposal in the Show Cause Notice was for restricting the Cenvat Credit to Rs. 17,982/- only, there is no case for imposing of penalty more than that amount. Since after the amendment for the Section 78, penalty can not be imposed under both Section 76 and Section 78 simultaneously. Accordingly the Order in Appeal is confirmed for confirmation of service tax of Rs. 17,982/- and equal amount of penalty imposed under Section 78.

Decision: - The appeal was disposed of.

Comment:-The essence of this case is that the order in original cannot travel beyond the allegations proposed in the show cause notice. When the show cause notice proposed to disallow only the part of the input service tax credit that was not used in providing the output service, the order in original cannot confirm disallowance of entire credit along with equal penalty under section 78. The credit disallowed and the penalty under section 78 were reduced accordingly.

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PJ/Case law/2013-14/1933

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