2016 (1) TMI 1133 - AT - Service Tax

Period of limitation - Refund claim - Rule 5 of Cenvat Credit Rules, 2004 - unutilized input service credit availed - export of exempted service subject to satisfaction of other conditions prescribed in Notification No. 5/2006-CE(NT) dated 14/3/2006 - nexus of input services with export of services - Held that - it appears that the refund claim has been filed within one year from the date of realization of foreign remittance towards export of services. If it is correct then refund cannot be held as time bar. As per the various judgments cited by the appellant it is settled that in case of refund towards export relevant date shall be the date on which foreign remittance has been received and the period of one year for filing refund claim shall be reckoned from date of receipt of foreign exchange. However this aspect has not been verified by the lower authority as the issue under dispute was whether the limitation is applicable for the refund under Rule 5, therefore this matter of refund of ₹ 81,80,550/- which was rejected on time bar needs to be re-examined and therefore same is remanded to the Adjudicating authority. Cenvat credit - disallowance in respect of input services and corresponding refund - inadmissible input services - Held that - we agree with the Ld. Commissioner(Appeals) that when there was no proposal in the show cause notice for denying the Cenvat credit at the stage of processing refund, Cenvat credit cannot be disallowed which is clearly beyond the scope of show cause notice. Therefore, we do not find any infirmity in the same and therefore we upheld the order of Commissioner(Appeals) on this issue to the extent he allowed the Cenvat credit and refund and interest thereon. - Appeal allowed by way of remand

Summary

Issues:
1. Rejection of refund claim on the grounds of time bar under Rule 5 of Cenvat Credit Rules, 2004.
2. Disallowance of Cenvat credit and corresponding refund due to inadmissible input services.

Analysis:

Issue 1: Rejection of Refund Claim on Time Bar:
The case involved appeals against the rejection of refund claims by the assessee and Revenue. The assessee filed refund claims under Rule 5 of Cenvat Credit Rules, 2004, for unutilized input service credit. The Commissioner(Appeals) rejected a refund of Rs. 81,80,550 on the grounds of time bar under Section 11B, while allowing a refund of Rs. 16,23,447 and Cenvat credit. The Tribunal noted that the refund was related to export of services, and the relevant date for filing the claim should be the date of receipt of foreign remittance. The Tribunal remanded the matter to the Adjudicating authority for re-examination as the lower authority did not verify this aspect.

Issue 2: Disallowance of Cenvat Credit and Corresponding Refund:
Regarding the disallowance of Cenvat credit and refund due to inadmissible input services, the Tribunal agreed with the Commissioner(Appeals) that the issue of inadmissible services was not raised in the show cause notice. The Tribunal emphasized that the denial of Cenvat credit without prior notice was beyond the scope of the show cause notice. The Tribunal also highlighted that the CESTAT had previously held the assessee eligible for the refund subject to other conditions, and the conditions for refund under the Notification did not stipulate the need for a correlation of service use. Therefore, the Tribunal upheld the Commissioner(Appeals) decision to allow the Cenvat credit and refund on this issue.

In conclusion, the Tribunal remanded the assessee's appeal to the Adjudicating authority and dismissed the Revenue's appeal, upholding the order of the Commissioner(Appeals) on the issues of Cenvat credit and refund.