2015 (6) TMI 1030 - AT - Service Tax

Eligibility for refund of Cenvat credit - Accumulated and claimed under Notification No. 5/2006 issued under Rule 5 of Cenvat Credit Rules 2004 - Information Technology Software Service (ITSS) not liable to tax - Held that - it was submitted that this claim has been rejected on the belief that the claim related to the period April 2008 but the claim actually related to the period subsequent to 16-5-2008 by which time ITSS had become liable to service tax. Appellant not registered till June 2008 - Held that - by following the decision of Tribunal in the case of Apotex Research Pvt. Ltd. & Others Vs. CC Bangalore-CUS 2015 (3) TMI 346 - CESTAT BANGALORE even before registration credit can be taken. No co-relation between export invoices and FIRC - Held that - Ld. Commissioner (Appeals) has observed that the appellant has not furnished details of all the exports in respect of which the particular FIRC pertains. The amount shown in the FIRC is more than the export invoices in respect of which refund is claimed. Ld. C.A. agrees that the appellant shall furnish the reconciliation statement showing all the export invoices relating to the particular FIRC irrespective of the period covered by the refund claims. Moreover it was also submitted that department insisted on bankers certificate of the FIRC whereas the instructions are to the contrary. In my opinion self-certification should be sufficient. Cenvat credit shown in the ST-3 returns does not tally with the amount claimed in the refund claims - Held that - the refund claim is not based on ST-3 returns and ST-3 return is nothing but a report of transactions that have taken place over a period covered by the returns. On the ground that the figures in ST-3 returns were not correct or there was a substantial difference refund claim cannot be rejected. For the purpose of consideration of refund claim the relevant documents on the basis of which credit was taken nature of service and its nexus and utilization of the service for rendering output service are relevant and merely because there was some mistake in the ST-3 returns substantive right of assessee for refund cannot be rejected. In view of the above the impugned order is set aside. - Matter remanded back

Summary

Issues involved: Eligibility of the appellant for refund of Cenvat credit under Notification No. 5/2006.

Analysis:

1. Issue 1 - Tax liability of Information Technology Software Service (ITSS):
The first ground for rejecting the refund was that ITSS was not liable to tax during the relevant period. However, it was clarified that the tax liability of ITSS is not relevant as per the decision of the Hon'ble High Court of Karnataka in a specific case. The rejection based on this ground was deemed irrelevant.

2. Issue 2 - Registration requirement for claiming credit:
The second ground raised was that the appellant had not obtained registration until a certain date. This ground was dismissed, citing a Tribunal case which held that credit can be availed even before registration. Therefore, lack of registration until a specific date was not a valid reason to reject the refund claim.

3. Issue 3 - Correlation between export invoices and FIRC:
The third ground for rejection was the lack of correlation between export invoices and Foreign Inward Remittance Certificate (FIRC). The Commissioner noted discrepancies in the amounts between FIRC and export invoices. The appellant agreed to provide a reconciliation statement for all export invoices related to specific FIRCs. It was also highlighted that self-certification should suffice, contrary to the department's insistence on a banker's certificate for FIRC.

4. Issue 4 - Discrepancy in Cenvat credit amounts:
Another ground was the discrepancy between Cenvat credit amounts in ST-3 returns and the refund claims. The judgment clarified that the refund claim is not solely based on ST-3 returns, which are a record of transactions. Discrepancies in ST-3 returns do not justify rejecting a refund claim. The focus should be on the documents supporting credit taken, the nature of service, utilization for output service, rather than minor errors in ST-3 returns.

In conclusion, the appellate tribunal set aside the impugned orders and remanded the matters to the original authority for reconsideration of the refund claims in light of the observations made in the judgment.