2015 (3) TMI 1125 - Commissioner - Service Tax

Corrigendum to show cause notice - Denial of natural justice - Entitlement for the Cenvat credit - as in the show cause notice the charge of suppression of facts from the department thereby invoking the larger period of limitation - Held that - It is observed and so contended by the appellant that the adjudicating authority has issued Corrigendum dated 22-1-2014 to the aforesaid show cause notice wherein the period covered in the impugned show cause notice was amended to 04/2012 to 03/2013 after 4-12-2013 referred to in Para 9 of the impugned Order as the date on which personal hearing was held. Since there is neither any reference in the impugned Order of any personal hearing being held after issuance of Corrigendum nor the department has made any submission in this regard it is concluded that either no personal hearing was held on 5-3-2014 and even if same was held the submissions made therein have not been recorded and taken into consideration by the adjudicating authority. In either scenario the principle of natural justice has been violated by the adjudicating authority as order has been passed without considering defence after issuance of Corrigendum . In the case of Penguin Electronics (P) Ltd. v. Commissioner of C. Ex. Mumbai-II 2005 (3) TMI 529 - CESTAT MUMBAI the Hon ble Tribunal has held that the issue of corrigendum to show cause notice after personal hearing is not valid. Thus the impugned order is annulled so far as it relates to the show cause notice dated 3-9-2013 which is the subject matter of instant appeal with a direction to the adjudicating authority to decide afresh after granting sufficient opportunity of personal hearing to the appellant.

Summary

Issues:
1. Denial of Cenvat credit of service tax and recovery with interest.
2. Imposition of penalty under Cenvat Credit Rules.

Analysis:

Issue 1: Denial of Cenvat credit and recovery with interest
The appellant challenged the denial of Cenvat credit of Rs. 4,72,454 and the recovery thereof along with interest. The appellant argued that the impugned order contained serious factual errors, invoked a longer period, altered charges from the original show cause notice (SCN), and issued subsequent SCNs not permitted by law. The appellant, a Govt. of India PSU, claimed no intent to evade duty or defraud revenue. The grounds of appeal highlighted the perceived injustice, illegality, and vagueness of the adjudicating authority's order. The appellant contended that subsequent SCNs were issued illegally after personal hearings, violating principles of natural justice. The appellant also argued against the imposition of a longer period for revenue recovery, citing relevant legal precedents.

Issue 2: Imposition of penalty under Cenvat Credit Rules
The appellant contested the penalty of Rs. 4,72,454 imposed under the Cenvat Credit Rules. The appellant's representative attended a personal hearing, reiterating the appeal's grounds. The respondent did not participate in the hearing. The Commissioner found that the appellant had a prima facie case for full waiver from pre-deposit, leading to a merit-based decision. Upon examination of facts, evidence, submissions, and legal provisions, the main issue was whether the appellant was entitled to the Cenvat credit. The impugned order covered the wrong availment of Cenvat credit on specific services, leading to allegations of suppression and the invocation of a longer limitation period.

The Commissioner noted a violation of natural justice due to the issuance of a corrigendum after a personal hearing, as per legal precedents. Citing relevant cases like Penguin Electronics (P) Ltd. and Bhushan Steel Ltd., the Commissioner annulled the impugned order related to the specific show cause notice, directing a fresh decision after granting the appellant a fair opportunity for a personal hearing. The appeal was disposed of accordingly, emphasizing the importance of due process and adherence to principles of natural justice in adjudication proceedings.