2010 (12) TMI 168 - AT - Service Tax

Cenvat credit - service tax wrongly with interest - amount of service tax availed as cenvat credit by the appellant - application for refund of interest paid on such wrong payment of service tax filed - Held that - Appellant not entitled to claim such refund as the amount of interest paid by them was inextricably linked with the amount of service tax already availed and utilized as CENVAT credit - neither Section 11B nor any principle of equity was invocable by the appellant for claiming refund of interest in the facts and circumstances of their case Appeal dismissed

Summary

Issues:
1. Entitlement to claim refund of interest paid on service tax.
2. Interpretation of Section 11B of the Central Excise Act.
3. Applicability of legal precedents on refund claims.

Issue 1: Entitlement to claim refund of interest paid on service tax:

The appellant sought a refund of interest paid on service tax for receiving business auxiliary services from foreign commission agents. The appellant argued that they were not liable to pay tax as a recipient of the service from abroad before a specific date. However, they had paid the tax and interest thereon. The Assistant Commissioner and the Commissioner (Appeals) rejected the refund claim, stating that the appellant had enjoyed the benefit of CENVAT credit by utilizing the service tax for payment of duty on their final products. The Tribunal held that the appellant cannot disown the tax liability after enjoying the benefits accrued from the payment of service tax. The Tribunal emphasized that interest liability is linked to delayed payment of tax, and since the appellant utilized the service tax for CENVAT credit, they cannot claim a refund of interest at a later stage. The Tribunal distinguished this case from others where refund claims were allowed, stating that the appellant's situation was different due to their use of CENVAT credit.

Issue 2: Interpretation of Section 11B of the Central Excise Act:

The learned SDR argued that prior to 12.5.2008, Section 11B of the Central Excise Act did not provide for a refund of interest. Therefore, the refund claim filed by the appellant on 2.1.2008 was not eligible for approval. The Tribunal concurred with this interpretation and highlighted that the absence of a statutory provision for refund of interest did not entitle the appellant to claim such a refund. The Tribunal concluded that neither Section 11B nor any equity principle could be invoked by the appellant to support their refund claim based on the specific circumstances of the case.

Issue 3: Applicability of legal precedents on refund claims:

The appellant relied on legal precedents where refund claims for interest on duty were allowed in various factual situations. However, the Tribunal differentiated those cases from the present one, emphasizing that the appellant had utilized the CENVAT credit of the service tax paid and could not claim a refund of interest separately. The Tribunal noted that the appellant's enjoyment of the statutory benefit of CENVAT credit precluded them from seeking a refund of interest paid on the service tax utilized for CENVAT credit.

In conclusion, the Tribunal dismissed the appeal, upholding the decisions of the lower authorities and denying the appellant's claim for a refund of interest paid on service tax.