2011 (1) TMI 99 - AT - Service Tax

Unjust enrichment Cenvat credit Refund claim - filing declaration by the transporters that no Modvat credit stand availed by them does not stand disputed by the Revenue - refund rejected on the ground that declarations were not on each of the invoice and were filed after the services were availed - Refund to be allowed As regards unjust enrichment also, Revenue has simply contended that the burden of proof is on the assessee - findings of the appellate authority with the said tax was paid subsequent to the clearance of the goods and the party wise ledger on record clearly show that the appellants have only claimed freight from their customers and Service Tax paid has not been charged, do not stand rebutted by the Revenue - no merit in the Revenue s appeal, hence rejected

Summary

Issues:
1. Refund claim of Service Tax on outward freight.
2. Conditions for availing abatement under Notification No. 32/2004-ST.
3. Rejection of refund claim by adjudicating authority.
4. Appeal against the rejection of refund claim.
5. Examination of sample invoices and unjust enrichment.

Detailed Analysis:
1. The case involved a refund claim of Service Tax on outward freight by a company engaged in the manufacture of M.S. pipes. The company had paid Service Tax on the freight paid for inputs received and outward transportation of finished goods to customers. The refund claim was based on the contention that the Service Tax should have been calculated after availing the abatement of 75% of the value in accordance with Notification No. 32/2004-ST.

2. The main issue revolved around the conditions for availing the abatement under Notification No. 32/2004-ST. The adjudicating authority rejected the refund claim citing non-fulfillment of conditions and lack of declarations regarding non-availment of Cenvat credit by the transporter on individual invoices. The Commissioner (Appeals) overturned this decision, emphasizing that the company had inadvertently paid Service Tax on 100% of the gross amount charged instead of 25% and later filed a refund claim for the excess amount paid.

3. The adjudicating authority rejected the refund claim primarily on the grounds of non-compliance with notification conditions and unjust enrichment. The authority stated that the necessary declarations were not provided on each invoice within the specified period and that the claim was hit by unjust enrichment due to the tax burden being passed on to customers.

4. Upon appeal, the Commissioner (Appeals) allowed the refund claim, highlighting that the company had fulfilled the eligibility criteria for the abatement and that the burden of unjust enrichment was not proven by the Revenue. The Revenue challenged the findings of the appellate authority, arguing that the burden of proof rested on the assessee.

5. The appellate tribunal upheld the decision of the Commissioner (Appeals), noting that the declarations by transporters regarding non-availment of Modvat credit were undisputed. The tribunal found no merit in the Revenue's arguments against the findings on unjust enrichment, as the company's ledger showed that the Service Tax paid had not been charged to customers. Consequently, the tribunal rejected the Revenue's appeal, affirming the allowance of the refund claim.