2015 (3) TMI 1059 - AT - Service Tax

Denial of refund claim - whether service tax was paid on processing of cashew nuts wrongly - refund claim was not registered but a letter was written to them on 4-10-2007 informing them that the refund claim was not filed in proper format and all supporting documents required were not submitted - exemption Notification No. 13/2003-S.T., dated 20-6-2003 - Bar of limitation - Held that - Conversion of cashew nuts to cashew kernel is not a simple process and it is not covered by any of the processes listed in the notification. The definition even provides the processes which can be undertaken but still remain within the category of agricultural produce and the process of drying the cashew nuts removing/peeling the skin, taking out the oil and thereafter grading them is definitely not covered by the processes described in the definition and therefore cashew kernel clearly goes out of the agricultural produce definition. As regards the second claim, it is very clear from the rules for interpretation that classification should not be undertaken on the basis of title but has to be done based on the description for chapter heading/sub-heading. Cashew nuts is a separate heading under Chapter 0801 and below that cashew nuts in shell are covered by 0801 3100 and shelled cashew nuts are covered by 0801 32. This would show that cashew kernels and cashew nuts are treated differently even in the tariff. Therefore I am unable to agree with the submission that cashew kernel is an agricultural produce. Therefore the service tax has been paid correctly. Therefore the benefit of notification cannot be extended and service tax has been paid correctly - Decided against the assessee.

Summary

Issues:
1. Refund claim rejection on the ground of limitation.
2. Classification of cashew kernels as agricultural produce for service tax exemption.

Issue 1: Refund claim rejection on the ground of limitation
The appellant, engaged in exporting various products, filed a refund claim for service tax paid to commission agents. The claim was initially rejected due to improper format and missing documents. The appellant rectified the omissions, but a portion of the claim was rejected as time-barred based on the date of the rectification. The appellant argued that the original filing date should be considered for limitation purposes, citing a precedent. The Tribunal agreed, stating that a revised submission should be seen as a continuation of the original claim. Therefore, the rejection on the ground of limitation was overturned.

Issue 2: Classification of cashew kernels as agricultural produce
The appellant claimed that cashew kernels should be considered agricultural produce, thus exempt from service tax, based on a notification and the Central Excise Tariff. The definition of agricultural produce was examined, which includes various items but excludes manufactured products. The Tribunal found that the process of converting cashew nuts to kernels involved more than the listed agricultural processes and did not fit the definition. Additionally, the classification under the Central Excise Tariff showed a distinction between cashew nuts and kernels, indicating separate treatment. Therefore, the Tribunal concluded that cashew kernels did not qualify as agricultural produce, and the service tax was correctly paid. The appeal was dismissed accordingly.