Order travelling beyond four walls of Show cause notice-not sustainable

PJ/Case Laws/2010-11/1064

Case: M/s Apotex Pharmachem India Pvt Ltd v/s Commissioner of Service Tax, Bangalore

Citation: 2011-TIOL-150-CESTAT-BANG

Issue:- The Adjudication Authority should confine themselves to the allegations made in show cause notice.

Brief Facts:- Appellant are 100% EOU engaged in Scientific Testing and Consultancy Services. They applied for refund of unutilised cenvat credit of service tax paid on input services under Rule 5 readwith Notification No. 5/2006-CE (NT) dated 14.03.2006.

Show cause notice was issued and the Adjudicating Authority rejected the refund claim on the ground of limitation and also on the ground of non-production of evidences. The Commissioner (A) upheld the order of the Adjudicating Authority.

Hence, appellant is before the Tribunal.

Appellant’s Contentions:- It is contended that the show cause notice was issued to the appellant for not enclosing the documents alongwith the refund claim and that was the only ground which has been made out in show cause notice, directing the appellant to show cause notice as to why the refund claim should not be rejected. It is submitted that the appellant had filed all the required documents as directed in the show cause notice but the Adjudicating Authority has gone beyond the show cause notice and has rejected the refund claim on the ground of time bar and also invoking the provisions of sub-rule (1) of Rule 4A of the STR, 1994.

It was submitted that they had taken this specific plea before the Commissioner (A) but he has not addressed the said plea. It was submitted that even the Commissioner (A) has gone beyond the allegations made in the show cause notice and hence, the order needs to be set aside. It was submitted that the retrospective amendment in Notification No. 05/2006-CE (NT) in the Finance Act, 2010 would be applicable in this case and refund of service tax credit taken on the input services cannot be denied to them, as there is no dispute regarding the eligibility to the Cenvat credit on the input services received by the appellant.

Reliance was placed on CST, Delhi v/s Convergys India Pvt Ltd [2009 (16) STR 198 (Tri-Del)], Capiq Engineering Pvt Ltd v/s CCE, Vadodara [2009 (245) ELT 186 (771-Ahmd), Lason India Pvt Ltd v/s CST, Chennai [2010-TIOL-1967-CESTAT-AHM], STI India Ltd v/s CC&CE, Indore [2009 (236) ELT 248 (MP)], Global Energy Food Industries v/s CCE, Ahmedabad [2010-TIOL-337-CESTAT-AHM] andRangdhara Polymers v/s CCE [2010-TIOL-518-CESTAT-AHM].

Respondent’s Contentions:- Revenue contended that show cause notice itself lays down a ground for co-relation of input services with export services and that would indicate that there was an allegation in the show cause notice that input services are not directly used for export services. Reliance was placed on following cases which would clearly indicate that eligibility to Cenvat credit of service tax paid needs to be gone into before deciding the refund due to the assessee:

Vikram Ispat v/s CCE, Aurangabad [2009-TIOL-997-CESTAT-MUM]
Maruti Suzuki Ltd v/s CCE, Delhi-III [2009-TIOL-94-SC-CX]
Chemplast Sanmar Ltd v/s CCE, Salem [2010-TIOL-180-CESTAT-MAD]
CCE, Nagpur v/s Manikgarh Cement Works [2009-TIOL-2059-CESTAT-MUM]
Madras Cements Ltd v/s CCE [2010 (254) ELT 3 (SC)]
KBACE Tech Pvt Ltd v/s CCE & ST, Bangalore [2010-TIOL-564-CESTAT-BANG]

Reasoning of Judgment:- The Tribunal noted that appellant, a 100% EOU, is not providing any services in India. It was held that as per Rule 5 of CCR, he was eligible to claim refund of cenvat credit availed by him on the input services.

It was recorded that Notification No. 5/2006-CE(NT) has been retrospectively amended by the Finance Act, 2010, which would indicate that the assessee are eligible for refund of the Cenvat credit on input or output services, which are “used for” providing output services, which has been exported, subject to safeguards and conditions, limitations set out in the Appendix to the Notification.

The Tribunal noted that this aspect is not considered by the Lower Authorities. It was also found that the show cause notice was issued for rejection of refund claim but both the Authorities below have not addressed themselves within the allegations mentioned in the show cause notice. It was held that it is settled law that quasi-judicial authorities should confine their findings and conclusions to the allegations made in the show cause notice after considering the defence put up by the assessee on such allegations.

It was noted that the Commissioner (A) had recorded a finding that the appellant had not produced any evidence regarding the claim of the refund. But from the record, it is clear that appellant had produced enormous evidences regarding the services received by him and on which service tax has been paid and the credit has been availed. It is not for the Tribunal to go into the factual matrix of the case and come to any conclusion whether the evidence was correct or not, which would be better left to the adjudicating authority.

Matter remanded for re-consideration of factual matrix and the retrospective amendment carried out to Notification No. 05/2006-CE (NT) without expressing any opinion on merits of the case. Impugned orders set aside.

Decision:- Appeal disposed of accordingly.

********

Comments

PJ/Case Laws/2010-11/1064

Post a Comment

Query