TaxTMI 
TaxTMI 
2024 (3) TMI 757
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....ices, and is having a centralized registration with the Service Tax Department. The Appellant's SEZ Unit was covered under Notification No.17/2011-S.T. dated 01.03.2011 ("Exemption Notification") which exempted SEZ Units from payment of Service Tax. 2. Show Cause Notice SCN dated 19.10.20216 ("SCN") was issued by the Respondent-Department demanding the Cenvat Credit to the tune of INR 1,83,78,512/- utilized by the Appellant for discharging there service tax liability which was allegedly not permissible under the Exemption Notification. 3. The Appellant filed its reply to the SCN and stated that no Cenvat Credit related to the SEZ unit was availed or utilized by any of the units of the Appellant, and the credit so utilized by the SEZ unit was availed by a non-SEZ unit covered under a centralized registration. 4. The SCN culminated into the Order-in-Original dated 27.03.2017 which confirmed the entire demand raised in the SCN along with interest and penalty. Being aggrieved the appellant filed an appeal before the learned Commissioner (Appeals). Learned Commissioner (Appeals) rejected the appeal on the ground that SEZ unit cannot operate under centralized billing system under Rule....
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.... for multiple units), that the Respondent-Department changed its position in the adjudication order. He further submitted that during the relevant period the Appellant had only utilized the total Cenvat Credit of Rs. 42,90,499/- for discharging tax liability for its SEZ unit and not Rs. 1,83,78,512 as confirmed in the OIO and as upheld in the Impugned Order. He further submitted that the extended period of limitation has wrongly been invoked in the present case on the following grounds:- a.) The Appellant has been regularly filing service tax returns with the service tax authorities evidencing the value of taxable services and payment of service tax thereon. b.) The Appellant is under bona fide belief that they had correctly utilized Cenvat credit of the Non-SEZ Unit for discharging the service tax liability of the SEZ Unit as it had a centralized registration for both the units. c.) the Appellant had disclosed all the information in their financial records and the Department had gathered information from their statutory documents. d.) The issue pertains to alleged mis-utilization of Cenvat credit by the SEZ unit, however the same credit could otherwise be utilized by the N....
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....o, hereby exempts the taxable services specified in clause (105) of section 65 ot the Finance Act, chargeable to tax under section 66 or section 66A of the Finance Act, received by a Unit located in a Special Economic Zone (hereinafter referred to as SEZ) or Developer of SEZ for the authorised operations, from the whole of the service tax, education cess and secondary and higher education cess leviable thereon." As is evident from the above, the Notification does not provide any restriction prohibiting the discharge of service tax liability of a SEZ Unit by utilizing Cenvat Credit of a Non-SEZ Unit. Further the said Notification also does not mandate the discharge of service tax liability in cash by GAR-7. That the Credit Rules, which govern the admissibility of credit for inputs, capital goods and input services used in the process of manufacture or for the provision of service also do not lay down any such condition or stipulation. The relevant part of the Credit Rules is being reproduced below: "Rule 3 (4) The CENVAT Credit may be utilized for payment of (a) Any duty of excise on any final product: or (b) An amount equal to CENVAT credit taken on inputs it such inputs ....
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....n. It is submitted that the sole basis for confirmation of demands in the Order-in-Original was that different invoicing series were being used for the two Units of the Appellant under centralized registration. As per the Impugned Order and the Order-in-Original, it was found that invoices for Non SEZ unit were of five digit series starting from Invoice No. 10096, whereas Invoices for SEZ units were of 9 digits starting from Invoice Number "200000049". On this basis, the Respondent has concluded that there is no centralized billing or accounting system and this finding was upheld in the Impugned Order. It is the case of the Appellant that the said finding is without any fact finding and without any legal basis and is totally baseless and incorrect. It is also submitted that as per the Rule 4(2)(iii), in order to obtain centralized registration, a taxpayer must have centralized billing or accounting system. The provision nowhere provides any requirement of same invoicing series for all the units. Relevant provision is extracted below for the sake of convenience: "2) Where a person liable for paying service tax on a taxable service, (i) Provides such service from more than one pr....
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....izing Cenvat credit availed from its Non-SEZ unit, the Adjudicating Authority has travelled beyond the SCN in the Order-In-Original. Holding that the appellant does not have a centralized registration as they do not maintain centralized billing or accounting system as appearing from different invoicing series of the SEZ and Non-SEZ unit of the appellant. Even the learned Commissioner (Appeals) further digressed from the SCN and held the SEZ unit cannot operate under a centralized billing system under Rule 19(7) of the SEZ Rules. 16. Accordingly, it is our considered view that both the Adjudicating Authority and the learned Commissioner (Appeals) have travelled beyond the scope of SCN which is not permitted. We find support the from the judgment of the Hon'ble Supreme Court in the case of CCE, Nagpur v. Ballarpur Industries Ltd., 2007 (215) ELT 489 (SC) that a show cause notice being the foundation of the matter, it was not permissible for the Commissioner to travel beyond it. The relevant observation is extracted below: "21. Before concluding, we may mention that, in the present case, the second and the third show cause notices are alone remitted. The first show cause notice dat....